Walmart sees slower online sales growth after tepid holiday quarter

(Reuters) – Walmart Inc (WMT.N) expects online sales growth to slow this year after posting lower-than-expected holiday quarter results, revealing the pressure traditional retailers are facing to keep pace with consumers who are increasingly shopping online.

Target Corp (TGT.N), Kohl’s Corp (KSS.N) and Macy’s Inc (M.N) also posted disappointing holiday sales in 2019, while (AMZN.O) logged record sales for the period.

Heavy investments to spruce up stores, enhance websites, improve delivery options and promote deals underscore the battle retailers are up against as they try to keep shoppers from going to Amazon.

“Walmart’s results show it’s a food fight out there, with Amazon re-accelerating holiday sales growth,” Evercore analyst Greg Melich said on Tuesday.

Walmart said it expects online sales to grow about 30% in fiscal 2021, down from last year’s growth of 37%. For the holiday quarter, the company reported a 35% increase in online sales – the slowest in nearly two years.

Sales at Walmart’s U.S. stores open at least a year rose 1.9%, excluding fuel, in the fourth quarter ended Jan. 31, well below analysts’ average estimate of 2.35%. Results were hit by a shorter holiday season and lower demand for apparel, toys and electronics.

“There were few weeks before Christmas where general merchandise sales and few categories in the stores were softer than anticipated and it was pretty much limited to apparel, toys, media and gaming,” Chief Financial Officer Brett Biggs told Reuters.

“There were some things in apparel, which we could have done differently in hindsight. We were a little more seasonal there than we should have been,” he added.

The company forecast full-year profit to be between $5 and $5.15 per share, below expectations of $5.22, while it expects U.S. comparable sales to grow at least 2.5% largely above expectations.

But the forecast excludes any potential financial hit from the coronavirus outbreak in China, Walmart said. However, it expected some impact in the current quarter from the epidemic.

“While expectations came down into the print, we believe the overall fourth-quarter miss and profit forecast are likely to

keep the stock in check in the near term as investors figure out if something has changed with the consumer and with Walmart,” J.P. Morgan analyst Christopher Horvers said.

Shares of the company rose about 1% in early trade.

Adjusted earnings per share increased to $1.38 per share, but missed the average estimate of $1.43.

Total revenue rose 2.1% to $141.67 billion, missing the estimate of $142.49 billion.

Source: Read Full Article