Walmart takes bruises from Amazon
But profits still large and its online sales growing well
BENTONVILLE, ARK. — Walmart is taking some bruises from its battle with online leader Amazon.
The world’s largest retailer reported a lowerthan-expected fourth-quarter profit and wrestled with slower e-commerce sales during the busiest time of the year, signs that underscore the company’s challenges in a fiercely competitive landscape.
The news, announced Tuesday, overshadowed the discounter’s better-than-expected sales at its established stores and higher customer counts as online services linked to its fleet attract more shoppers.
Its shares slipped nearly 10 per cent in afternoon trading, putting it on track for the biggest percentage drop since October 2015. Walmart was the largest percentage decliner in the Dow Jones industrial average, pushing down the benchmark index.
The mixed results raise concerns among some, that Walmart’s push to narrow the gap between Amazon.com Inc. and itself may be losing steam, even as it makes huge investments in both its digital business and stores lowering prices. E-commerce sales growth in its U.S. business slowed to 23 per cent during the fourth quarter, a sharp decline from 50 per cent in the third quarter. Walmart blamed the bulk of the slowdown to the company’s acquisition of online retailer Jet.com a year earlier. But it also acknowledged its own mistakes — a surge of TVs, toys and electronics to its warehouses during the peak periods of the holiday season crowded out more basic items. Still, Walmart finished the year with more than 40 per cent growth in online sales in the U.S., and it expects that online sales will be revived this year to hit that same pace.
Walmart and other retailers of all stripes are looking at new ways to compete in light of swiftly changing shopping habits.
Walmart is building fewer big stores and focusing on investments in its online business while beefing up benefits for its workers.
Since buying Jet.com for more than $3 billion a year and a half ago, Walmart has added online services, acquired brands like Bonobos and ModCloth and vastly expanded the number of items available online. Walmart is also getting ready to launch an overhauled website with a focus on fashion and home furnishings. It has teamed up with Lord & Taylor to create dedicated space on its site.
Walmart has aggressively cut prices and plans to double the number of stores where groceries can be ordered online and picked up curbside to 2,000 locations this year.
“We’re accelerating innovation in the business to make shopping faster and easier for our customers,” said Doug McMillon, CEO of Walmart Inc., in a prerecorded transcript.
But Walmart has a long way to get even close to Amazon’s online dominance. Amazon.com Inc. has leveraged its $99-a-year Prime membership program into intense loyalty from customers.
Walmart earned $2.17 billion in the threemonth period ended Jan. 31. That compares with $3.76 billion in the year-earlier period.
The world’s largest retailer posted revenue of $136.27 billion.