Shares for Walmart are taking a beating today — down nearly 10 percent to $94.74 as of 10:45 a.m. ET — after the firm missed profit forecasts and reported a deceleration in e-commerce growth during the all-important holiday period.
After several quarters of robust online growth, the retail behemoth — which has steadily ramped up its efforts to compete with digital powerhouse Amazon — said e-commerce sales and gross merchandise volume at Walmart U.S. increased 23 percent and 24 percent respectively, a slowdown compared with previous periods when e-commerce sales grew as much as 50 percent.
Overall, the largest private employer in the U.S. — which last month promised to use new corporate tax kickbacks to up its employee minimum wage — said it’s fourth-quarter profits were $1.33 per share, 4 cents shy of analysts’ bets for adjusted earnings per diluted share of $1.37. On a reported basis, earnings per diluted share were 73 cents.
Revenues increased 4.1 percent to $136.3 billion, topping projections for revenues of $134.9 billion. Walmart U.S. comp sales increased 2.6 percent and comp traffic increased 1.6 percent.
Over the past three years — facing Amazon’s frantic rise and general brick-and-mortar pressures — Walmart had moved aggressively to up the ante on digital — snapping up Jet.com, ShoeBuy (now Shoes.com), Moosejaw, ModCloth and Bonobos in the past 18 months. In November, the company also announced a new online partnership with upscale department store Lord & Taylor.
On a call with investors today, Walmart president and CEO Doug McMillon shrugged off the e-commerce deceleration as one that was “expected” after the firm lapped its Jet.com acquisition “as well as created a healthier long-term foundation for holiday.”
“A smaller portion of the slowdown was unexpected as we experienced some operational challenges that negatively impacted growth,” he added, before recounting a list of the firm’s latest digital savvy moves that suggest the retailer continues to move in the right direction for the long term.
“This has also been a year of good progress in e-commerce,” McMillon said during today’s conference call. “We launched free two-day shipping on Walmart.com. We’re expanding our test of same-day and next-day delivery, and our Walmart.com assortment has grown to nearly 75 million SKUs. Acquisitions like Bonobos and ModCloth bring unique, private-branded products to our shopping experience. In addition, partnerships like the agreement with Lord & Taylor will help create specialty experiences that complement our own assortment with more brands customers want.”
For the full-year, Walmart total revenues advanced 3 percent to $500.3 billion. E-commerce sales and gross merchandise volume at its U.S. division increased 44 percent and 47 percent, respectively. Fiscal year reported EPS was $3.28 and $4.42 on an adjusted basis.
Looking ahead, the firm calls for comparable sales growth of 2 percent at Walmart U.S.; consolidated net sales growth of 1.5 percent to 2 percent; e-commerce sales growth of 40 percent (U.S.); and EPS of $4.75 to $5.