Walmart sees slower online sales growth after tepid holiday quarter

Walmart sees slower online sales growth after tepid holiday quarter

Walmart Inc expects online sales growth to slow this year after posting lower-than-expected holiday quarter results, revealing the pressure traditional retailers are facing to keep pace with consumers who are increasingly shopping online.

FILE PHOTO: A customer pays for her groceries at a Walmart store ahead of the Thanksgiving holiday
FILE PHOTO: A customer pays for her groceries after shopping at a Walmart store ahead of the Thanksgiving holiday in Chicago, Illinois, U.S. November 27, 2019. REUTERS/Kamil Krzaczynski/File Photo

REUTERS: Walmart Inc expects online sales growth to slow this year after posting lower-than-expected holiday quarter results, revealing the pressure traditional retailers are facing to keep pace with consumers who are increasingly shopping online.

Target Corp , Kohl's Corp and Macy's Inc also posted disappointing holiday sales in 2019, while Amazon.com logged record sales for the period.

Heavy investments to spruce up stores, enhance websites, improve delivery options and promote deals underscore the battle retailers are up against as they try to keep shoppers from going to Amazon.

"Walmart's results show it's a food fight out there, with Amazon re-accelerating holiday sales growth," Evercore analyst Greg Melich said on Tuesday.

Walmart said it expects online sales to grow about 30per cent in fiscal 2021, down from last year's growth of 37per cent. For the holiday quarter, the company reported a 35per cent increase in online sales - the slowest in nearly two years.

Sales at Walmart's U.S. stores open at least a year rose 1.9per cent, excluding fuel, in the fourth quarter ended Jan. 31, well below analysts' average estimate of 2.35per cent. Results were hit by a shorter holiday season and lower demand for apparel, toys and electronics.

"There were few weeks before Christmas where general merchandise sales and few categories in the stores were softer than anticipated and it was pretty much limited to apparel, toys, media and gaming," Chief Financial Officer Brett Biggs told Reuters.

"There were some things in apparel, which we could have done differently in hindsight. We were a little more seasonal there than we should have been," he added.

The company forecast full-year profit to be between US$5 and US$5.15 per share, below expectations of US$5.22, while it expects U.S. comparable sales to grow at least 2.5per cent largely above expectations.

But the forecast excludes any potential financial hit from the coronavirus outbreak in China, Walmart said. However, it expected some impact in the current quarter from the epidemic.

"While expectations came down into the print, we believe the overall fourth-quarter miss and profit forecast are likely to

keep the stock in check in the near term as investors figure out if something has changed with the consumer and with Walmart," J.P. Morgan analyst Christopher Horvers said.

Shares of the company rose about 1per cent in early trade.

Adjusted earnings per share increased to US$1.38 per share, but missed the average estimate of US$1.43.

Total revenue rose 2.1per cent to US$141.67 billion, missing the estimate of US$142.49 billion.

(Reporting by Nandita Bose in Washington and Aishwarya Venugopal in Bengaluru; Editing by Saumyadeb Chakrabarty, Bernard Orr)

Source: Reuters

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