Walmart’s bruising battle with Amazon
NEW YORK >> Walmart is getting bruised in its battle with online leader Amazon.
The world’s largest retailer on Tuesday reported a smaller-than-expected fourth-quarter profit as it wrestled with slower e-commerce sales during the busiest time of the year. The results underscore the company’s challenges in a fiercely competitive retail landscape.
Its stock took a beating, falling 10.2 percent to post its biggest single-day percentage drop in 30 years. Its decline was a big factor in a drop of 1 percent by the Dow Jones industrial average.
The fourth-quarter profit numbers overshadowed the discounter’s better-thanexpected sales at its established stores and higher customer traffic as online services linked to its stores attract more shoppers.
The company’s mixed results raise concerns its push to narrow the gap between itself and Amazon may be losing steam. This despite it making huge investments in both its digital business and its stores, where it has taken steps like lowering prices.
Walmart’s e-commerce sales growth in its U.S. business slowed to 23 percent during the fourth quarter, a sharp decline from 50 percent in the third quarter. It noted last year’s results got a big boost from its acquisition of online retailer Jet. com.
But it also acknowledged its own mistakes — a surge of TVs, toys and electronics into its warehouses during the peak periods of the holiday season crowded out more basic items. Still, Walmart finished the year with more than 40 percent 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 is looking at new ways to compete in light of swiftly changing shopping habits. It 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 this year to 2,000 locations.
“We’re accelerating innovation in the business to make shopping faster and easier for our customers,” said Walmart CEO Doug McMillon.
But Walmart has a long way to get close to Amazon’s online dominance. Amazon has leveraged its $99-a-year Prime membership program into intense loyalty from customers, and it’s recently stepped into Walmart’s turf, no longer content with only online sales. After spending $14 billion to acquire Whole Foods last summer, Amazon just announced two-hour delivery from the grocery chain for its members.