Shoppers helped Walmart pick up steam in its race against Amazon–and investors breathed a sigh of relief that online sales didn’t just grow. They soared.
E-commerce sales in the U.S. were up 33% in the last quarter, topping the online purchases made at Walmart.com during the holiday quarter by 10%.
That seemed to reassure investors that the world’s biggest retailer was holding its own against Amazon. Shares were up .55% to $86.55 in early morning trading.
Groceries proved to be a sweet spot in bringing shoppers online. Customers were attracted by low prices, more choices, and the growing ability to pick up vegetables, steaks and cereal bought with the click of a button at a local store, or to have them ferried to their front door.
But customers weren’t just shopping online. More shoppers flocked to Walmart stores to buy their groceries, refill their prescriptions, and decorate their homes. Store traffic was up slightly less than 1%, and sales at U.S. stores open at least a year increased 2.1%.
“We’re encouraged by the progress made across the business and the continued momentum we’ve experienced,” Doug McMillon, Walmart Inc.’s president and CEO told investors according to a transcript of his remarks.
To take on online giant Amazon, Walmart has invested heavily in its e-commerce business, upgrading its online experience, partnering with upscale retailer Lord & Taylor, and purchasing sites that specialize in products ranging from menswear to shoes.
But investors worried when e-commerce sales in the holiday quarter rose at a much slower pace than the previous three month period when sales leaped 50%.
Now, the retailer looks to be back on track, thanks in part to a recent sleek makeover of Walmart.com.
In the weeks since that upgrade, the number of visitors clicking online to buy groceries has increased between 10% and 20%. And Walmart says that it expects to see the roughly 40% surge in online sales for the year that it previously predicted.
Walmart, which became the biggest in the world by being a reliable go-to for low-priced merchandise, is also continuing its chase of a more affluent customer.
It’s partnered with premium retailer Lord & Taylor, which will debut a branded shop on Walmart.com in the next several weeks. And Walmart’s online marketplace Jet.com will offer more items from Apple and other premium brands to attract affluent Millennials living in urban centers like San Francisco and New York who are less likely to take a look at Walmart.com.
“They are meant to be targeting very different demographics and audiences,’’ Marc Lore CEO of Walmart eCommerce U.S. said about the two websites in a call with the media.
Walmart also recently announced that it has taken its ongoing battle with Amazon global, paying roughly $16 billion for a 77% stake in India’s biggest e-commerce business, Flipkart Group.
The deal, which gives the retailer a foothold in one of the world’s largest markets, bested a reported offer by Amazon to become the dominant stakeholder in the Indian online company.
But that investment, along with the money Walmart is pouring into revamping its stores, updating its website, and buying other e-commerce sellers, is taking an at least temporary toll on its bottom line.
Walmart warned for instance that the Flipkart deal will likely dent its full year earnings per share by 25 to 30 cents.
Still, “it remains a necessity,” Neil Saunders, managing director of retail consultancy GlobalData said in a note. “Diverting some profit to prudent investments is now a price for survival across most of the retail sector.”
Walmart’s $1.14 in earnings per share, beat the estimate of analysts with S&P Global Market Intellience by two cents.
Walmart has been tackling Amazon on its online turf by tapping into it’s network of 4,700 stores to get products into customers’ hands faster.
It plans to make the delivery of grocery orders an option at 800 more stores this year, an expansion that will make the service available for more than 40% of U.S. households.
A separate service allows Walmart shoppers to purchase groceries online and then pick them up from any one of 1,200 stores, with another 1,000 locations scheduled to be added in 2018.
Last year Walmart.com rolled out its free two-day shipping on all orders over $35…this year its getting a much anticipated facelift. Buzz 60's Chandra Lanier has the story.
Walmart Inc, the largest U.S. retailer, says it will raise the minimum age to purchase firearms to 21 after the massacre at a Florida high school that has reopened a fierce debate over gun control in America. Ryan Brooks reports.
Video provided by Reuters
Those are direct jabs at Amazon. which purchased Whole Foods Market for $13.7 billion in 2017.