Wal-Mart‘s U.S. business is still showing signs of thriving, as evidenced by the company’s fiscal first-quarter results, and it’s being fueled largely by more clicks and sales on Walmart.com.
The big-box retailer has been making strides to expand and improve its e-commerce platform amid an online battle with players like Amazon and Target, prompting analysts to monitor sales growth in this area particularly closely.
Wal-Mart managed to grow its e-commerce sales a whopping 63 percent during the latest period, compared to 29 percent growth last quarter, and the majority of these sales were organic through Walmart.com, the company said.
Online gross margin values increased 69 percent, Wal-Mart said.
Wal-Mart’s recent acquisition of Jet.com, its competitive free-shipping threshold of $35 and its overall lower prices relative to peers have allowed the traditionally- brick-and-mortar retailer to make gains online.
Shares of Wal-Mart’s stock were falling around 1.5 percent during premarket trading following the release of the earnings report.
Here’s what the company reported vs. what the Street was expecting:
- Earnings per share: $1.00 vs. expectations for 96 cents, according to Thomson Reuters analysts.
- Revenue: $117.5 billion vs. a forecast of $117.74 billion, analysts said.
- Same-store sales: 1.4 percent growth at U.S. stores
“We delivered a solid first quarter and we’re encouraged by the start to the year,” Wal-Mart CEO Doug McMillon said in a statement. “We’re moving faster to combine our digital and physical assets to make shopping simple and easy for customers. Our plan is gaining traction.”
Wal-Mart said it now expects to earn between $1 and $1.08 per share during the second-quarter, excluding a net benefit from the sale of Suburbia, the retailer’s apparel format in Mexico.
With respect to its international locations, sales were $27.1 billion for the first quarter, a decrease of 3.5 percent. Wal-Mart no longer reports an overarching global figure for its e-commerce growth, instead choosing to focus on the U.S. market. Its domestic online performance has been outpacing results overseas, the retailer has said.
For fiscal 2018, Wal-Mart has said it expects to earn between $4.20 and $4.40 a share.
“Overall, [Wal-Mart’s] investments have resulted in positive comparable store sales trends and improving traffic,” Stifel analyst Mark Astrachan wrote in a note to clients prior to Thursday’s earnings. “Walmart’s success, along with broadly weakening brick and mortar shopping trends, has caused competing retailers to respond with their own pricing actions.”
On Wednesday, big-box retail rival Target reported earnings, sales and comparable sales that topped Street expectations. Target is in the midst of a multiyear turnaround effort, as it attempts to compete with Wal-Mart’s “Everyday Low Price” strategy and Amazon’s encroaching presence over the industry.
“While [Target] is not trying to directly undercut Walmart on prices, it is trying to use everyday lower prices on daily use items to drive customers into remodeled stores that provide a better experience than Walmart,” Astrachan said.
As of Wednesday’s close, shares of Wal-Mart have climbed nearly 19 percent over the past 12 months and are up about 9 percent for the year-to-date period.
