Walmart Cautions on Slower Online Sales Growth as Digital Transformation Proves Challenging

Walmart Inc. is bracing itself for slower online sales growth for the year.

The big-box chain said that sales for its e-commerce arm, which continues to undergo a transformation, increased 35% during the fourth quarter — its slowest gain in nearly two years. Further, it expects digital revenues to improve about 30% for the fiscal year, down from last year’s 37% growth.

Walmart, which had anticipated strong holiday sales, disappointed investors with lower than expected fourth-quarter earnings and revenues, driven by sluggish demand during the crucial retail months of November and December.

For the period ended Jan. 31, the Bentonville, Ark.-based firm logged adjusted earnings per share of $1.38, compared with analysts’ bets of $1.43. Revenues advanced 2.1% to $141.67, also missing forecasts of $142.49 billion, and same-store sales climbed 1.9% versus predicted growth of 2.3%.

“We started and finished the quarter with momentum, while sales leading up to Christmas in our U.S. stores were a little softer than expected,” President and CEO Doug McMillon said in a statement. “The New Year has started off well, and we look forward to another strong year. We remain focused on providing our customers with the best omnichannel experience from any retailer.”

With its latest financial results, Walmart joins competing nationwide chains Macy’s, Kohl’s and JCPenney, all of which ended the holiday season on weak footing. The earnings report also comes just days after Walmart announced it would shut down its personal shopping service, Jetblack. The text-to-shop platform was the “first portfolio company” to launch from Walmart’s startup incubator, Store No. 8, and was created by Jet.com founder Marc Lore and spearheaded by Rent the Runway co-founder Jenny Fleiss.

In the last year alone, Walmart sold women’s apparel company ModCloth and announced its decision to fold the retail, technology, marketing, analytics and product teams of Jet.com, which it had acquired in 2016 for $3.3 billion, into its own online business. It has also ramped up its delivery and pickup options as well as investments in infrastructure and new hires.

Despite ongoing e-commerce challenges and its high-stakes rivalry with Amazon, some experts remain optimistic in Walmart and expect to see its digital initiatives pay off in the long run.

“Walmart is setting a great example for other established retailers,” said Calvin Carter, CEO of digital transformation firm Bottle Rocket. “For digital change to succeed, retailers must determine which technologies work most effectively in different areas of the business. … Ultimately, brands that find innovative ways to surprise and delight customers and orchestrate multichannel, seamless and simple experiences in all aspects of their business, while meeting the changing customer expectations at all turns, will put distance between themselves and competitors that fail to [do so].”

At market open, Walmart’s stock was up 0.79% to $118.82.

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