Wal­mart’s bid

to pump up its on­line busi­ness has paid off, with a 63 per­cent surge in In­ter­net sales in the most re­cent quar­ter.

The Washington Post - - FRONT PAGE - BY SARAH HALZACK sarah.halzack@washpost.com

Wal­mart has re­cently put its foot on the gas in its bid to catch up with Ama­zon.com in the e-com­merce world, most no­tably by ac­quir­ing a col­lec­tion of smaller shop­ping sites and rolling out splashy of­fers such as free two­day ship­ping on many pur­chases.

Now there are signs that it is pay­ing off: Wal­mart on Thurs­day re­ported a ro­bust 63 per­cent surge in on­line sales in the most re­cent quar­ter. What is more im­por­tant, the com­pany said that the ma­jor­ity of the in­crease came from sales growth at Wal­mart. sug­gest­ing fresh mo­men­tum at its flag­ship dig­i­tal busi­ness.

“The ac­qui­si­tions have re­ceived a lot of at­ten­tion, but our plan in e-com­merce is not to buy our way to suc­cess,” Doug McMil­lon, Wal­mart’s chief ex­ec­u­tive, said in re­marks to in­vestors.

To be sure, on­line shop­ping still makes up a tiny slice of Wal­mart’s busi­ness, and it re­mains to be seen whether this strong growth is sus­tain­able. But it is an en­cour­ag­ing sign for a com­pany that has spent bil­lions of dol­lars try­ing to step up its game in this arena.

Marc Lore, the head of the re­tailer’s on­line busi­ness, said that a key driver of the growth was its move to of­fer free two-day ship­ping on mil­lions of items with­out a membership fee. That model was meant to of­fer the speed of Ama­zon Prime with­out hav­ing to pay a membership fee. Wal­mart said it also helped that it has ex­panded its as­sort­ment on­line to 50 mil­lion items, a five­fold in­crease from this time last year. (Jeffrey P. Be­zos, the chief ex­ec­u­tive of Ama­zon, owns The Wash­ing­ton Post.)

The com­pany has been try­ing sev­eral new tac­tics to lure more on­line shop­pers, in­clud­ing of­fer­ing a dis­count on cer­tain e-com­merce pur­chases if shop­pers pick them up at a store in­stead of hav­ing them de­liv­ered to their homes.

Mean­while, Wal­mart’s broader U.S. busi­ness looked healthy in the quar­ter. The com­pany re­ported an in­crease of 1.4 per­cent in com­pa­ra­ble sales, a mea­sure of its sales on­line and at stores open more than a year. That marked its 11th con­sec­u­tive quar­ter of growth on this mea­sure.

That con­sis­tent run of growth stands in con­trast to what has been seen lately in the wider re­tail in­dus­try. Tar­get re­cently re­ported its fourth straight quar­ter of declining com­pa­ra­ble sales. De­part­ment stores such as Macy’s, J.C. Penney and Kohl’s saw their sales slide in the lat­est quar­ter. Things are look­ing grim at sev­eral spe­cialty ap­parel re­tail­ers: Ralph Lau­ren said Thurs­day that it recorded a 16 per­cent drop in quar­terly sales. As­cena Re­tail Group, the par­ent com­pany of Ann Taylor, Loft and other cloth­ing chains, saw its stock nose-dive 38 per­cent on Thurs­day af­ter it low­ered its fore­casts for the year, cit­ing “un­prece­dented sec­u­lar change” in its cat­e­gory of re­tail­ing.

“Given the cur­rent re­tail landscape, with many re­tail­ers ex­pe­ri­enc­ing chal­lenges across mul­ti­ple cat­e­gories, we be­lieve Wal­mart will con­tinue to turn up the com­pet­i­tive heat by utiliz­ing its scale and tech­no­log­i­cal ad­van­tages to ex­tract in­creased mar­ket share,” Charlie O’Shea, a re­tail an­a­lyst at Moody’s, said in a re­search note.

In­vestors sent Wal­mart’s stock up about 2 per­cent in morn­ing trad­ing. The com­pany’s rev­enue rose to $117.5 bil­lion, or $118.8 bil­lion, if you ad­just for cur­rency fluc­tu­a­tions. Earn­ings per share were $1.

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