THE DOT-BOMB

Slower Webeb growth slams WaWalmart

Disappointed Walmart investors raced to the exits on Tuesday after the discounter reported online sales gains had slumped significantly.

Shares of the Bentonville, Ark., chain dropped 10 percent, to $94.11 — the worst single-day drop in 30 years.

The tumble of the Dow Jones industrials component worsened the fall of the blue chip index, which was off 254.63 points. (See page 27.)

Walmart, which has been battling to keep pace with Amazon, said digital sales in the three months ended Jan. 31 gained 23 percent — down from the 50 percent gain posted a year ago.

The decline weighed heavily on Wall Street, even though the chain’s samestores sales gained 2.6 percent — the 14th straight quarter it has posted a gain in comp-store sales.

In a departure, Walmart hosted a live call with analysts, some of whom speculated the retailer decided to do more than just issue a statement in order to quell any possible investor revolt stemming from the results.

If that was the reason —it failed.

“Everyone has been saying for the past couple of years that it’s Walmart and Amazon against everyone else” in [e-commerce] retail, Edward Jones analyst Brian Yarbrough said. “They have done a good job of turning their business around, but in the end, Walmart is still a bricks-and-mortar retailer.”

Most of the online sales decline was planned, the company said, as it continues to pump cash into the growing business.

But Chief Executive Doug McMillon flagged its Jet.com unit — which Walmart ac- quired in 2016 for $3.3 billion — explaining that its growth will not be as robust as it had been.

Walmart will shift investments away from Jet.com to Walmart.com, McMillon said.

“The cost to acquire a new customer on a nationwide basis is cheaper with the Walmart brand, so we’ve been investing more in Walmart.com on a national basis and reducing marketing in- vestment in Jet except in certain urban markets,” McMillon said, adding, “Due to this change, Jet will not grow as quickly as it did in the early days, but it will be well positioned where we’ve chosen to focus the brand.”

At least some of the decline in Walmart’s sales growth stemmed from self-inflicted wounds as the company admitted operational problems around inventory replenish- ment that hurt sales growth.

Walmart brought a lot of large items, such as bigscreen televisions, into its distribution centers over the holiday period. The large items bogged down Walmart’s ability to ship its everyday bulk items, the company said.

But analysts remained perplexed. “I don’t think people walked away with a full explanation about why the busi- ness slowed down as much as it did,” Gordon Haskett analyst Chuck Grom said.

Excluding special items, earnings came to $1.33 per share in the quarter ended Jan. 31. The average analyst estimate was $1.37 per share.

Net income dropped 42.1 percent, to $2.18 billion. Total revenue increased 4.1 percent, to $136.3 billion, beating estimates of $134.9 billion.