Walmart's Online Sales Growth Slows

By Sarah Nassauer and Austen Hufford 

Walmart Inc. said Tuesday that sales rose steadily over the busy holiday shopping period, but online sales growth slowed during the quarter as the world's largest retailer tries to fend off Amazon.com Inc.

The company said operational snags cut into growth at its U.S. ecommerce business. Walmart also said it has cut overall marketing spending at Jet, the high-profile online store it bought in Sept. 2016, to instead focus on acquiring new customers for its main website. The company expects Jet to continue to target higher income, urban shoppers, but not grow as quickly as it did in its early days.

In the quarter, Walmart posted a profit of $2.18 billion, or 73 cents a share, compared to a profit of $3.76 billion, or $1.22 a share, in the same period a year before. On an adjusted basis, the company brought in $1.33 a share, below the $1.37 expected by analysts polled by Thomson Reuters.

Same-store sales at Walmart's U.S. stores rose 2.6%, above the company's guidance for the quarter ended Jan. 31. In part Walmart benefited from a strong economy that also boosted holiday sales at other retailers, but stronger sales across a broad category of merchandise and lower inventory also helped, the company said. Sales in existing stores have risen for 14 consecutive quarters. Traffic rose 1.6%.

U.S. e-commerce sales grew 23% in the fourth quarter, down from 50% in the third quarter. Walmart expects U.S. e-commerce sales to grow 40% in this fiscal year, in-line with what it previously expected. E-commerce sales still account for a small fraction of the retailer's over half-a-trillion dollars in annual revenue.

For the current year that just started, the company expects U.S. comparable Walmart store sales to rise 2% and net sales growth of 1.5% to 2%. Shares fell 3.8% in premarket trading.

Last month, Walmart said it would raise starting wages for store workers to $11 an hour, add parental-leave benefits and hand out a one-time bonus to many hourly workers. The wage and bonus payments would cost around $700 million up front, the company said. Analysts estimate the additional parental-leave benefits would cost around $100 million.

The company also said the new U.S. tax law added to earnings by $207 million in its latest quarter, though that amount could shift as the company completes its analysis.

Write to Sarah Nassauer at [e-mail] and Austen Hufford at [e-mail]

(END) Dow Jones Newswires

February 20, 2018 07:41 ET (12:41 GMT)

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