Amid shifting consumer demands, rising brick-and-mortar rents and a trade war-induced economic slowdown, e-commerce giants Walmart and Alibaba have managed to paint a rosier picture for the retail sector.
The two companies are helping Wall Street breathe a sigh of relief after the worst day of trading in 2019. Retail stocks were also battered following the release of Macy’s dismal earnings results on Wednesday, as investors expressed concerns that the department store chains’ troubles were emblematic of larger problems in the industry.
Walmart upped its full-year guidance after posting second-quarter earnings and sales that topped analysts’ expectations, sending its shares up 5% in intraday trading. In its earnings report, the Bentonville, Ark.-based company noted a 2.8% climb in revenues both online and in stores. Its strongest growth was in the e-commerce space, which saw a 37% rise in sales.
“Customers are responding to the improvements we’re making, the productivity loop is working and we’re gaining market share,” said CEO Doug McMillon.
Chinese online heavyweight Alibaba also logged better-than-expected gains, seeing its stock rise 2.5% on Thursday. Revenues at its online marketplaces Taobao and Tmall improved 26%, while sales in its cloud computing unit — which competes with Amazon — jumped 66%, driven by an increase in average revenue per customer.
“We will continue to expand our customer base, increase operating efficiency and deliver robust growth,” said CEO Daniel Zhang. “With strong cash flow from our core commerce business, we will continue to invest in technology and bring digital transformation to millions of businesses globally.”
Alibaba’s report also demonstrates the firm’s strength amid uneven economic indicators in its home country, as the United States and China continue to negotiate an end to their protracted trade war. Early this week, President Donald Trump announced that the White House would postpone its 10% levy on some of the $300 billion worth of Chinese products.
Accompanying the retailers’ positive earnings reports are upbeat retail sales data, helping ease investor anxieties about a possible recession. According to the Commerce Department, American shoppers boosted their spending in July, with retail sales advancing 0.7% from the prior month. Consumer spending serves as an important indicator of domestic growth.
As of 1 p.m. ET, Walmart Inc.’s stock was up 4.43% to $110.93. Alibaba’s shares were in the green 2.25% to $165.70.
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