Online sales give Walmart a boost
Surging online sales and strong food sales helped Walmart deliver its largest sales gain for established US stores in more than eight years.
The retail giant has now raised its annual profit outlook after delivering third-quarter results that beat expectations.
“We have momentum and it’s encouraging to see customers responding to our store and e-commerce initiatives,” said Walmart’s president and CEO Doug McMillon.
Walmart posted quarterly revenue of US$123.18 billion ($172.45 billion), surpassing Wall Street forecasts of US$121.05 billion.
After a recent string of e-commerce acquisitions, Walmart’s online sales grew 50 per cent, though this still only accounts for about 2 to 3 per cent of annual sales, or about US$14 billion.
This compares with Amazon’s US$94.66 billion in the last calendar year.
Sales at stores opened at least a year rose 2.7 per cent for the Walmart US division, beating estimates of 1.8 per cent and marking the biggest gain since the first quarter of 2009.
The company now expects full-year earnings in the range of US$4.38 to US$4.46 per share. It originally expected earnings per share to be in the range of US$4.30 to US$4.40.
“Today’s numbers show that Walmart is firmly on the advance, both in its home market and elsewhere. A revenue rise of 4.2 per cent, which equates to a $5 billion increase in sales over the period, is impressive and underscores the company’s determination to not only defend its leading position but to extend it,” said Neil Saunders, managing director of GlobalData Retail.
Saunders pointed to the success of initiatives such as free two-day shipping and the expanded online selection, which now encompasses over 70 million products.
“From our data, it is clear that Walmart is not only getting existing customers to spend more online but is also attracting new shoppers,” he said.
“With a solid e-commerce base, Walmart is now looking to deepen its offer and experience in a select number of categories. This is one of the reasons it has struck deals with partners like Lord & Taylor in fashion and is building relationships with premium brands like KitchenAid and Bose.
“Walmart’s longer-term aim is clear: it wants to become the go-to online destination for both every day and specialty items. The push into higher-end products should also help to bolster online margins.”
The second reason for Walmart’s growth in the US is the performance of its stores. Traffic has held up, and price cuts are helping to keep customers loyal, especially in categories like grocery.
“All in all, today’s results show that Walmart is a retailer on the front foot. Admittedly, the investments it is making in price and e-commerce are taking their toll on the bottom line, but they are also positioning the company for significant future success,” said Saunders.