WMT Walmart Inc

By Sarah Nassauer and Austen Hufford 

Walmart Inc. said Tuesday that sales rose steadily over the busy holiday shopping period, but online sales growth slowed during the quarter as the world's largest retailer tries to fend off Amazon.com Inc.

The company said operational snags cut into growth at its U.S. e-commerce business. Walmart also said it has cut overall marketing spending at Jet, the high-profile online store it bought in September 2016, to instead focus on acquiring new customers for its main website. The company expects Jet to continue to target higher-income, urban shoppers, but not grow as quickly as it did in its early days.

In the quarter, Walmart posted a profit of $2.18 billion, or 73 cents a share, compared with a profit of $3.76 billion, or $1.22 a share, in the same period a year before. On an adjusted basis, the company brought in $1.33 a share, below the $1.37 expected by analysts polled by Thomson Reuters.

Same-store sales at Walmart's U.S. locations rose 2.6%, above the company's guidance for the quarter ended Jan. 31. In part Walmart benefited from a strong economy that also boosted holiday sales at other retailers, but stronger sales across a broad category of merchandise and lower inventory also helped, the company said. Sales in existing stores have risen for 14 consecutive quarters. Traffic rose 1.6%.

U.S. e-commerce sales grew 23% in the fourth quarter, down from 50% in the third quarter. Walmart expects U.S. e-commerce sales to grow 40% in this fiscal year, in-line with what it previously expected. E-commerce sales still account for a fraction of the retailer's over half-a-trillion dollars in annual revenue.

For the current year that just started, the company expects U.S. comparable Walmart store sales to rise 2% and net sales growth of 1.5% to 2%.

Shares fell 3.8% in premarket trading.

Last month, Walmart said it would raise starting wages for store workers to $11 an hour, add parental-leave benefits and hand out a one-time bonus to many hourly workers. The wage and bonus payments would cost around $700 million up front, the company said. Analysts estimate the additional parental-leave benefits would cost around $100 million.

The company also said the new U.S. tax law added to earnings by $207 million in its latest quarter, though that amount could shift as the company completes its analysis.

Walmart has drastically shifted how it spends, moving away from building more cavernous supercenters, instead improving existing stores and investing in e-commerce. That shift has included store closures, job cuts and a tighter control on everyday expenses as Walmart invests in faster home delivery, e-commerce acquisitions and partnerships with international online retailers. Still those efforts continued to pressure margins, which fell as Walmart spent to grow e-commerce sales and reduced prices in some markets.

Overall holiday sales have been strong at many traditional retailers, as well as Amazon, pushed by rising wages and low unemployment. Last month Target Corp, Macy's Inc. and J.C. Penney Co. said sales grew over the holidays. Walmart said it saw solid holiday sales.

E-commerce sales at Walmart U.S. have grown quickly since the acquisition of Jet.com Inc. Jet founder Marc Lore took over Walmart's e-commerce operations, quickly adding features like free two-day shipping on more items, expanding online selection and buying a string of smaller online retailers. Walmart also has added hundreds of online grocery pickup locations at stores, which are counted in the e-commerce figures. Walmart has expanded the grocery pickup option quickly, noting it is less expensive than delivering fresh food to homes. On Tuesday the company said it would also expand its grocery home delivery services.

Write to Sarah Nassauer at sarah.nassauer@wsj.com and Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

February 20, 2018 07:58 ET (12:58 GMT)

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