Walmart’s online sales spur big growth in Q2
Walmart propelled itself forward in the second quarter with a boost in digital sales and increased store sales driving earnings and revenue that beat Wall Street’s estimates for the Bentonville, Ark.-based retailer.
The discount giant’s revenue rose 3.8% to $128.03 billion in the quarter ended July 31, beating analysts’ estimates for $125.97 billion. Same-store U.S. sales increased 4.5%, led by grocery, apparel and seasonal; foot traffic was up 2.2%. Grocery sales rose the most in nine years, helped by improved fresh-food offerings. Same-store sales at Walmart’s Sam’s Club rose 5%, the biggest increase in five years.
Walmart has been making significant investments online — from its improved e-commerce site to expanded grocery delivery options — and the results appear to be paying off. Online U.S. sales jumped 40% during the second quarter, and the retailer reiterated it is on track to increase U.S. e-commerce sales by 40% for the full year.
In comments, analyst Neil Saunders, managing director, GlobalData Retail, called out the chain’s new website, noting it is easier to shop, has a much wider assortment, and is now more connected than ever to services like in-store pickup.
“From our data, the addition of more premium brands, including the Lord & Taylor initiative, is starting to have an impact as there has been a notable increase in the number of higher income customers visiting the site over the past couple of months,” Saunders said. “This is exactly the kind of result Walmart needs to achieve if it is to compete more effectively with Amazon.”
Walmart reported a net loss for the quarter of $861 million, or 29 cents a share, compared with net income of $2.9 billion, or 96 cents a share, a year ago. Excluding one-time items including a loss related to the sale of a majority stake in Walmart Brazil, Walmart earned $1.29 per share, which was 7 cents ahead of analysts’ expectations.
It was not all good news for the chain, however. Walmart’s margins continue to be under pressure amid investments in cutting prices, digital, store refurbishments, and increased labor and transportation costs.
“As painful as they are, the erosion of profitability and margins are necessary evils,” Saunders said. “Maintaining a price leadership position as well as ensuring the company is an omnichannel leader are clear priorities that require investment. These investments are being made and they are delivering growth, which we believe in a sign that Walmart is succeeding in securing its future as one of the world’s leading retailers.
For the full year, Walmart now expects to earn between $4.90 and $5.05 per share, which is up from a prior range of $4.75 to $5 and excluding any impact from its pending acquisition of Flipkart. It expects U.S. same-store sales to increase rise about 3%, up from a prior target of at least 2%.
“We’re pleased with how customers are responding to the way we’re leveraging stores and e-commerce to make shopping faster and more convenient,” Walmart CEO Doug McMillion said in a statement. “We’re continuing to aggressively roll out grocery pickup and delivery in the U.S., and we recently announced expanded omnichannel initiatives in China and Mexico.”
L&R Distributors chooses ItemMaster for consumer-facing e-commerce content
National distribution company L&R Distributors is partnering with ItemMaster, a leading provider of content and data technology for CPG and retail, to help drive its e-commerce innovation and grow digital sales. The partnership will see Chicago-based ItemMaster building and managing the consumer-facing content and attributes of L&R products, syndicating the content to L&R’s retail partners.
Currently, Brooklyn, N.Y.-based L&R’s supermarket, drug, independent and mass distribution network touches more than 17,000 points, with a focus on the display and distribution of slow-turning SKU-intensive products. L&R said it selected ItemMaster as a content partner after reviewing its own straight-to-manufacturer product information management strategy
“In today’s digital landscape, the ability to present and position merchandise online is as important as any other factor in supporting the business of our customers,” L&R distributors CEO Marc Bodner said. “With ItemMaster, we can create, manage and deliver superior consumer-facing product content to our retail partners in a pain-free way that will help them maximize their investments in digital commerce and achieve their goals.”
ItemMaster said that managing and merchandising long-tail categories on physical shelves can be difficult. With ItemMaster, L&R said it would transition to include such e-commerce innovations as endless aisle with voice search to help engage online shoppers. The direct-to-consumer offering can help L&R retail and CPG partners compete in long-tail categories by using an endless aisle approach to access for a diverse assortment of less mainstream categories and items.
“For retailers and brands looking for new ways to monetize their e-commerce channels, high-quality product content is imperative,” says Dev Ganesan, CEO of ItemMaster. “Our cloud-based SaaS creates the innovative product content with rich attributes and data management systems to help suppliers like L&R better position their customers for innovation and growth.”
Among the reasons L&R decided to partner with ItemMaster were its flexible approach to onboarding and managing product content, its ability to bring a product to market in as little as six days, creating a product record using OCR, artificial intelligence and machine learning; and the quality of ItemMaster’s data.
Retail sales see summer spike for July
Despite concerns about the growing trade war, consumers continued to spend in July — a move that contributed to the sixth consecutive month of retail sales gains.
Retail sales increased 0.4% seasonally adjusted over June, and 4.9% unadjusted year-over-year, according to the National Retail Federation. The NRF numbers exclude automobiles, gasoline stations and restaurants.
Overall July sales – including automobiles, gasoline and restaurants – were up 0.5% over June. They were also up 6.4% year-over-year.
The month’s sales build on improvement seen in June, which was down 0.1% monthly from May, but up 3.9% year-over-year.
For the three-month moving average, sales were up 5% over the same period a year ago. The numbers come two days after NRF revised its annual forecast. The organization expects 2018 retail sales to grow by at least 4.5% over 2017, rather than the 3.8% to 4.4% predicted earlier this year.
“Today’s numbers mirror the economy, which is in very good shape,” NRF chief economist Jack Kleinhenz said.
Kleinhenz credits the economy’s health to consumer confidence, a strengthening labor market and more after-tax dollars in household wallets thanks to tax reform.
“Consumer fundamentals remain healthy and continue to provide the wherewithal for consumers to drive domestic economic growth,” he added. “Consumer spending is the backbone of the current economic expansion, but the fly in the ointment is uncertainty regarding tariffs. If they escalate, they will no doubt weigh on confidence and household spending.”
Specifics from key retail sectors during June include:
- Online and other non-store sales were up 11.3% year-over-year, and up 0.8% month-over-month seasonally adjusted.
- Health and personal care stores were up 6.2% year-over-year, but down 0.4% month-over-month seasonally adjusted.
- Building materials and garden supply stores were up 5.8% year-over-year, and unchanged month-over-month seasonally adjusted.
- Clothing and clothing accessory stores were up 5.4% year-over-year, and up 1.3% month-over-month seasonally adjusted.
- Electronics and appliance stores were up 4.2% year-over-year, and up 0.1% month-over-month seasonally adjusted.
- Furniture and home furnishings stores were up 3.9%, year-over-year, but down 0.5% month-over-month seasonally adjusted.
- Grocery and beverage stores were up 3.6% year-over-year, and up 0.6% month-over-month seasonally adjusted.
- General merchandise stores were up 1.8% year-over-year, and up 0.7%, month-over-month seasonally adjusted.
- Sporting goods stores were down 5.7% year-over-year, and down 1.7% month-over-month seasonally adjusted.