Walmart Sees Slowing Online Sales Growth After Lackluster Holiday Quarter

Reuters  |

Source: Walmart Inc.

By Nandita Bose and Aishwarya Venugopal

(Reuters) - Walmart Inc forecast slowing online growth for the year on Tuesday after reporting weak results for the holiday quarter that suggested it was leaking sales to Amazon.com.

Holiday sales for brick-and-mortar retailers were disappointing as 2019 saw a majority of shoppers switch to online buying, helping Amazon report “record” sales for the period.

Retailers such as Target Corp, Macy’s Inc and Kohl’s Corp, however, have reported dismal sales for the crucial period, which had six fewer days in 2019.

“Walmart’s shockingly bad results for its all-important holiday shopping quarter indicate that some of the company’s recent investments to bolster its e-commerce operations have failed to materialize,” said Jesse Cohen, senior analyst at financial markets platform Investing.com.

Walmart has been spending heavily to grow its online business and build up the digital capabilities of its stores, through services that help shoppers buy groceries online for pickup in store parking lots.

The company said it expects online sales to grow about 30% in fiscal 2021, down from last year’s growth of 37%. For the holiday quarter, the company reported a 35% rise, its slowest in nearly two years.

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

“In the few weeks before Christmas, we experienced some softness in a few general merchandise categories in our U.S. stores,” Chief Financial Officer Brett Biggs said.

The company forecast full-year profit to be between $5.00 and $5.15 per share, below expectations of $5.22. The forecast excludes any potential financial effect from the coronavirus outbreak in China, the company said.

“Walmart’s weak guidance outlook for 2021 indicate that more storm clouds are on the horizon, even without accounting for the effects of coronavirus’ spread,” Cohen said.

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

Total revenue rose 2.1% to $141.67 billion, missing the estimate of $142.49 billion.

Reporting by Nandita Bose in Washington and Aishwarya Venugopal in Bengaluru; Editing by Saumyadeb Chakrabarty.

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Source: Reuters

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