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.”
No comments found