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Walmart's e-commerce sales on the rise

Big-box retailer posts better than expected quarterly results
5/17/2018

Walmart is reporting better-than-expected profit and revenue for the first quarter with rebounding e-commerce sales.

Revenue at Walmart stores opened at least a year rose 2.1%, the company said Thursday, also surprising Wall Street.

It's an encouraging report from Walmart, which like other retailers is looking at new ways to compete in light of swiftly changing shopping habits and intense competition from Amazon.

Walmart, while spending more on its workers to improve service, is building fewer big stores and expanding its online business. Walmart wants to harmonize its online services with its 4,700 U.S. stores.

"Competition in retail remains acute on all fronts, and we believe Walmart is well-positioned to thrive against all competitors in this environment," said Moody's lead retail analyst Charlie O'Shea.

Since buying Jet.com for more than $3 billion nearly two years ago, Walmart has buttressed its presence online, acquired brands like Bonobos and ModCloth, and vastly expanded the number of goods its sells from its site.

READ: Walmart’s Jet.com targets millennials with new grocery line

It's also strengthening delivery to make shopping at Walmart even easier. In March, Walmart began expanding its same-day delivery service to more than 40% of U.S. households, or 100 metro areas by year end.

Walmart is reworking its website with a focus on fashion and home furnishings. It has teamed up with Lord & Taylor to create dedicated space on its site, which will be launched in the next few weeks.

Such initiatives helped boost online sales, which rose 33% in the first quarter, a strong showing following a disappointing 23% increase in the final quarter of last year. Wall Street punished the company for the end-of-year e-commerce performance, sending company shares plunging more than 10%. It was the biggest single-day percentage drop in 30 years.

Still, digital sales are below the 40% growth that Walmart is expecting for this year.

Walmart has a long way to get even close to Amazon's online dominance. Amazon has leveraged its Prime membership program into intense loyalty from customers. Amazon recently raised its annual fee for membership to $119, from $99. And it's stepped into Walmart's turf, no longer content with only online sales.

After spending nearly $14 billion to acquire Whole Foods last summer, Amazon announced two-hour delivery from the grocery chain for its members. It also said that Prime members will get an additional 10% on sale items and exclusive deals on certain groceries at Whole Food stores. Those expanded benefits go nationwide this summer.

 

Walmart posted a first-quarter profit of $2.13 billion on Thursday, or 72 cents per share. Earnings, adjusted for non-recurring costs, were $1.14 per share, which is 2 cents better than industry analysts were expecting, according to a survey by Zacks Investment Research.

That compares with $3.04 billion, or $1 per share, in the year ago quarter.

Walmart's Sam's Club division had a strong quarter too, with revenue at stores opened at least a year up 5.2%.

The Bentonville, Arkansas, company's revenue rose 4.4% to $122.69 billion, beating projections for $120.08 billion.

 

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