Walmart U.S. Q4 Ecommerce Sales Slow

Walmart U.S.’ fourth-quarter ecommerce sales and gross merchandise volume (GMV) continued to ascend, albeit far less dramatically, from the previous reporting period, rising 23 percent and 24 percent, respectively. 

"The majority of this slowdown was expected as we fully lapped the Jet acquisition, as well as created a healthier long-term foundation for holiday," observed President and CEO Doug McMillon during an earnings call, noting that Q3 ecommerce sales were up 50 percent.  "A smaller portion of the slowdown was unexpected as we experienced some operational challenges that negatively impacted growth."

Still, he was confident of a rebound, given that "Online Grocery customers ... spend more with us in total once they start using the service." Therefore, McMillon revealed, "we'll lean in this year by nearly doubling the number of Online Grocery locations in the U.S."

Further, as "[t]he cost to acquire a new customer on a nationwide basis is cheaper with the Walmart brand," McMillon explained that the company has "been investing more in Walmart.com on a national basis and reducing marketing investment in Jet, except in certain urban markets."

He added," Due to this change, Jet will not grow as quickly as it did in early days, but it will be well positioned where we've chosen to focus the brand," which overindexes with higher-income, urban, Millennial shoppers, a strength that Walmart plans to build on in future.

Meanwhile, with total revenue up $5.3 billion, or 4.1 percent, to $136.3 billion (excluding currency, total revenue rose $4.1 billion, or 3.1 percent, to $135.1 billion) Walmart Inc. posted a U.S. comparable-store sales increase of 2.6 percent and a 1.6 percent comp traffic gain. On a two-year stack, 4.4 percent comp sales growth marked the mega-retailer’s best performance in eight years.

“We have good momentum in the business, with solid sales growth across Walmart U.S., Sam’s Club and International,” said McMillon. “We’re making real progress putting our unique assets to work to serve customers in all the ways they want to shop, and I want to thank our associates for their great work this past year. We’re making decisions to position the business for success and investing to win with customers and shareholders.”

Illustrating McMillon’s comments, Sam's Club comp sales, excluding fuel, increased 2.4 percent, led by comp traffic growth of 4.3 percent, while Walmart International net sales were $33.1 billion, a 6.7 percent uptick (excluding currency, $31.9 billion, a 2.8 percent increase). All told, nine of Walmart’s 11 markets reported positive comp sales, including its four largest markets.

For fiscal 2018, Walmart’s total revenue was up $14.5 billion, or 3 percent, to $500.3 billion (excluding currency total revenue rose $15.1 billion, or 3.1 percent, to $500.9 billion). Ecommerce sales and GMV at Walmart U.S. for the fiscal year grew 44 percent and 47 percent, respectively.

In its fiscal 2019 full-year guidance, the company anticipated comps increases of at least 2 percent at Walmart U.S. (excluding fuel) and 3 percent to 4 percent at Sam’s Club (excluding fuel and tobacco); consolidated net sales growth in constant currency of 1.5 percent to 2 percent, adversely affected by, among other things, previously revealed Sam’s Club closures and the decision to remove tobacco from some clubs; Walmart U.S. ecommerce sales growth of about 40 percent; EPS of $4.75 to $5, including a benefit of about 5 cents from currency based on current rates; and capital expenditures of about $11 billion.

Bentonville, Ark.-based Walmart operates more than 11,700 stores under 59 banners in 28 countries and ecommerce websites, employing about 2.3 million associates worldwide.