Walmart Extends Streak of Sales Growth -- 2nd Update
May 16 2019 - 11:03AM
Dow Jones News
By Sarah Nassauer
Walmart Inc. said its sales rose in the first quarter, adding to
over four years of sales increases as the retail behemoth grabs
market share from struggling competitors and grows online.
Sales at U.S. stores and websites operating at least 12 months
grew 3.4% during the quarter ended in April, boosted by online
purchases, including grocery, and a strong Easter buying season,
the company said Thursday.
In the U.S., sales grew steadily throughout the quarter, the
company said, even as national data released earlier in the week
showed a slight slowdown in spending at U.S. retailers in April.
Meanwhile, Macy's this week reported slightly better-than-expected
comparable sales in the latest quarter, up 0.6%.
While some retailers have closed stores or seen sales sputter in
recent years as they adjusted to the rise of online shopping,
quarterly comparable sales have risen consistently in Walmart's
primary U.S. business for over four years.
Walmart has shifted strategies, significantly reducing spending
on building new stores in favor of growing online, lowering prices
and adding more services in physical stores such as online grocery
pickup.
The company is growing quickly online, in large part by adding
more stores that offer pickup and delivery options, increasing
online grocery sales.
Walmart's e-commerce sales are still a small percentage of the
retail giant's overall sales and of total U.S. e-commerce sales.
Walmart U.S. e-commerce sales grew by 40% to $15.7 billion in the
fiscal year ended Jan. 31.
Amazon.com Inc. continues to challenge the Bentonville,
Ark.-based company by working to build its own grocery business and
shortening delivery windows. Last week, Walmart said it has
invested in its online delivery network over the past two years to
speed delivery times.
Walmart has also added more fashion and home brands to
walmart.com, efforts that executives said are bearing fruit. Home
and fashion, generally higher-margin categories than groceries, are
growing considerably faster than other categories on its website,
said Marc Lore, head of Walmart's U.S. e-commerce business, on a
call with reporters Thursday.
Walmart stocked more goods during the quarter than the same
period last year. Inventories were up about 5.9% as the retailer
accelerated buying in toys and shoes in response to competitor
bankruptcies in those categories, said Walmart U.S. Chief Executive
Greg Foran on the call, while buying more in other areas such as
patio furniture where there is a chance to build market share.
Walmart is also bulking up product quantities in its e-commerce
fulfillment centers as it works to deliver online orders more
quickly.
Walmart faces higher potential product prices after the Trump
administration last week increased tariffs on about $200 billion of
goods imported from China to 25% from 10% and threatened a further
set of tariffs on all Chinese imports. Executives have said they
are working to bring in some imports earlier than previously
planned ahead of rising tariffs.
The company's shares rose 3.3% in morning trading Thursday.
Walmart has raised prices on some products in response to the
tariffs, Brett Biggs, the retailer's chief financial officer, said
in an interview. Merchandisers are working to manage costs by
changing product selection and reducing manufacturing costs
elsewhere, he said.
Walmart is the largest importer in the country, according to the
Journal of Commerce. But around 56% of its U.S. sales are from
groceries, which are less likely to come from China than other
products such as Christmas lights or apparel. Around two-thirds of
Walmart's purchases are made in the U.S., company executives have
told investors.
Profits continue to come under pressure as more revenue comes
from lower-margin online sales and online investments continue.
Walmart's operating income in the quarter fell 4.1% to $4.9
billion, in part because its purchase of Indian e-commerce startup
Flipkart last year is weighing on profits as expected.
In the U.S., the largest piece of Walmart's business, operating
income grew 5.5%, as some transportation costs subsided and online
sales margins improved, countered by continued efforts to lower
prices.
Adjusted earnings per share slipped 0.9% to $1.13.
E-commerce sales continued to rise, boosted by a rapid expansion
in online grocery offerings, up 37% in the U.S. during the quarter.
Walmart has said it expects U.S. e-commerce sales to grow 35% for
the full fiscal year.
Total company revenue rose 1% to $123.9 billion from $122.7
billion during the same period last year.
Write to Sarah Nassauer at sarah.nassauer@wsj.com
(END) Dow Jones Newswires
May 16, 2019 11:48 ET (15:48 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
Walmart (NYSE:WMT)
Historical Stock Chart
From Apr 2024 to May 2024
Walmart (NYSE:WMT)
Historical Stock Chart
From May 2023 to May 2024