Web helps Wal­mart beat ex­pec­ta­tions

The Standard (St. Catharines) - - Business - ANNE D’IN­NO­CEN­ZIO

NEW YORK — Wal­mart is re­port­ing bet­ter-than-ex­pected profit and rev­enue for the first quar­ter with re­bound­ing on­line sales.

Rev­enue at Wal­mart stores opened at least a year rose a solid 2.1 per cent, the com­pany said Thurs­day.

It’s an en­cour­ag­ing re­port from Wal­mart as it searches for solid foot­ing in a rapidly chang­ing en­vi­ron­ment which in­cludes a dominant Ama­zon.com that is en­croach­ing on­line and in some cases, just down the street.

A mixed picture has emerged for re­tail­ers this quar­ter with eco­nomic in­di­ca­tors show an econ­omy that con­tin­ues to gain mo­men­tum. Un­em­ploy­ment is at a 17-year low and wages are rising, even if stub­bornly

Macy’s, cit­ing the eco­nomic re­bound and an ag­gres­sive push to re­vi­tal­ize its brand, put up its sec­ond con­sec­u­tive quar­ter of rising sales at es­tab­lished stores this week. But J.C. Pen­ney, still scarred from a dis­as­trous at­tempt at its own re­vival a few years ago, floun­dered. It cut its out­look for the year Thurs­day as it trims send­ing to off­set de­clin­ing rev­enue. Nord­strom will re­lease its quar­terly re­port later Thurs­day.

Wal­mart, while spend­ing more on its work­ers to im­prove the in-store ex­pe­ri­ence, is build­ing fewer big stores and ex­pand­ing on­line. It wants to har­mo­nize its grow­ing port­fo­lio of on­line ser­vices with its 4,700 U.S. stores, which could be an ad­van­tage while tak­ing on Ama­zon.com

“Com­pe­ti­tion in re­tail re­mains acute on all fronts, and we be­lieve Wal­mart is well-po­si­tioned to thrive against all com­peti­tors in this en­vi­ron­ment,” said Moody’s Lead Re­tail An­a­lyst Char­lie O’Shea.

Since buy­ing Jet.com for more than $3 bil­lion nearly two years ago, Wal­mart has con­tin­ued to but­tress its pres­ence on­line, ac­quired brands like Bono­bos and ModCloth. It has vastly in­creased the num­ber of goods its sells out­side of its stores.

It’s also strength­en­ing de­liv­ery to make shop­ping at Wal­mart even more at­trac­tive. In March, Wal­mart said it would ex­pand same-day de­liv­ery to more than 40 per cent of U.S. house­holds, or 100 metro ar­eas by the end of the year.

Wal­mart is re­work­ing its web­site with a fo­cus on fash­ion and home fur­nish­ings. The new site also makes it eas­ier for shop­pers to see what ser­vices are avail­able, such as the abil­ity to or­der gro­ceries on­line, and pick them up on the way home. It has also teamed up with Lord & Tay­lor to cre­ate ded­i­cated space on its site, which will be launched in the next few weeks.

On­line sales rose 33 per cent in the first quar­ter, a strong show­ing af­ter a dis­ap­point­ing 23 per cent in­crease in the fi­nal quar­ter of last year.

Wall Street pun­ished the com­pany for the end-of-year per­for­mance on­line, send­ing com­pany shares plung­ing more than 10 per cent. It was the big­gest sin­gle-day per­cent­age drop for shares in 30 years. Marc Lore, CEO of Wal­mart’s U.S. on­line busi­ness, told re­porters on a call Thurs­day it’s see­ing 10 per cent to 20 per cent more growth go­ing to on­line gro­cery busi­ness.

Wal­mart ex­pects 40 per cent growth in on­line sales this fis­cal year, but it’s a dis­tant sec­ond to Ama­zon.

Ama­zon.com Inc. has lever­aged its Prime mem­ber­ship pro­gram into in­tense loy­alty from cus­tomers. Ama­zon re­cently raised its an­nual fee for mem­ber­ship to $119, from $99.

And af­ter spend­ing $14 bil­lion to ac­quire Whole Foods last sum­mer, Ama­zon an­nounced twohour de­liv­ery from the gro­cery chain.

While it fights off ri­vals at home, the world’s largest re­tailer is ex­pand­ing abroad, con­cen­trat­ing on ar­eas with big growth po­ten­tial like In­dia and China.

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