Walmart holiday quarter profit falls, comparable sales beat estimates

It was the largest single-day drop since October 2015. In taking a page from the so-called Amazon playbook, Walmart hopes to beat the e-commerce behemoth at its own game.

The news, announced Tuesday, overshadowed the discounter’s better-than-expected sales at its established stores and higher customer counts as online services linked to its fleet attract more shoppers. E-commerce sales and gross merchandise volume at its US division increased 44 percent and 47 percent, respectively.

Walmart’s customers who shop both in stores and on its websites are key for the company, said Mr. McMillon, spending almost twice as much with Walmart as those who shop in stores alone. Walmart paid $3.3bn to buy Jet.com in 2016. While sales rose, they did so by less than expected.

“Management expects the growth rate to ramp back up to the 40%+ range after 1Q, but we suspect this target will be met with more skepticism following 4Q17 results than when it was first laid out to investors several months ago”, chimes in RBC Capital analyst Scot Ciccarelli.

“We’re confident in our strategy to transform the company”.

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. “We launched free two-day shipping on Walmart.com”.

Walmart itself is building fewer big stores and focusing on investments in its online business while beefing up benefits for its workers. McMillon said on the call that Walmart is still a “really well-known brand for value” in middle American places like Oklahoma, while Jet plays well with urban millennial and higher income customers in places like the New York City metro area.

“We still believe Walmart has more work to do to widen its e-commerce customer base”, said GlobalData Retail Managing Director Neil Saunders in response to Walmart’s earnings report. It’s possible we may choose to lose a little more in eCommerce this year than we did last year, but generally speaking, we think it’d be about the same level of losses.

Revenue at stores opened at least a year rose 2.6 percent at its namesake US stores. It’s also daunting that this growth is slower when matched up with Amazon’s 40% growth during the holiday quarter.

“We have good momentum in the business and solid sales growth across Wal-Mart US, Sam’s Club and global”, said Doug MacMillion, President and CEO, Wal-Mart.

In its fiscal 2019 full-year guidance, the company anticipated comps increases of at least 2 percent at Walmart U.S.

Walmart informed that its online revenues were $11.5bn in 2017, but it lost money on those sales. Nine out of eleven of Walmart’s markets posted positive same store sales.

On Tuesday February 20th, 2018, Walmart released their fourth quarter earnings before the market opened for trading. Executives demurred when asked by analysts Tuesday where Walmart might invest in its various e-commerce platforms going forward.

GAM Holding AG decreased its position in Wal-Mart Stores, Inc.