Walmart shares fall after digital sales taper off

Is that all there is?

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

Shares of the Bentonville, Ark., chain were down 9.4 percent, to $94.94 at 12:53 p.m.

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

The decline seemed to weigh heavy on Wall Street even though the chain’s same-stores sales gained 2.6 percent — the 14th straight quarter it has accomplished that feat.

In a departure from most Walmart earnings reports, which are simply posted online, company brass hopped on a live call with analysts Tuesday. Some speculated that the retailer decided to have a live call to quell any possible investor revolt born out of the disappointing results.

If that was the plan — 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, said Edward Jones analyst Brian Yarbrough. “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 its growing online business.

But chief executive Doug McMillon flagged its Jet.com unit — which it acquired in 2016 for $3.3 billion to fuel its online growth — explaining that its growth will not be as robust as it had been.

Walmart will shift investment cash away from Jet.com to Walmart.com, McMillon said in prepared remarks.

“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 investment 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.”

Last month, Jet.com president Liza Landsman said she would exit after just 18 months in the position.

At least some of the sales growth shrinkage stemmed from self-inflicted wounds as the company admitted operational problems around inventory replenishment that hurt sales growth.

Walmart brought a lot of large items, such as big-screen televisions, into its distribution centers over the holiday period. The large items appeared to have bogged down Walmart’s ability to ship out its everyday bulk items, analysts said.

Excluding special items such as restructuring charges and one-time bonus to employees, earnings came to $1.33 per share in the fourth quarter ended Jan. 31. The average analyst estimate was $1.37 per share, according to Thomson Reuters I/B/E/S.

Net income dropped 42.1 percent to $2.18 billion. Consolidated operating income fell 28 percent to $4.5 billion.

Total revenue increased 4.1 percent to $136.3 billion, beating analysts’ estimates of $134.9 billion.

Source: https://nypost.com/2018/02/20/walmart-shares-fall-after-digital-sales-taper-off/

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