Walmart's transformation bears fruit

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Walmart's transformation bears fruit

02/21/2017

The retailer posted a comp sales increase of 1.8% for the fourth quarter ended Jan. 27. It’s Walmart’s largest same-store sales increase since July 2012. 

Customer traffic was up 1.4% compared to the year-earlier number of 0.7%, as the retailer continues to make changes to improve the customer experience. And neighborhood Market comps increased approximately 5.3%.

“We’re pleased with the continued momentum in Walmart U.S. with steady improvement in stores, strong growth from e-commerce and growing contributions from the rollout of Online Grocery,” said Brett Biggs, EVP and CFO at Walmart. “We’ve now seen 9 consecutive quarters of traffic growth in our stores.”

Total revenue for the quarter was $130.9 billion, an increase of 1%. Excluding currency, total revenue was $133.6 billion, an increase of 3%.

Apparel, health and wellness, and grocery were some of the top-performing categories at the company's U.S. stores in the fourth quarter, while electronics sales were soft.

“We were particularly pleased with the positive comp in grocery despite ongoing market deflation in food, which negatively impacted the Food comp by approximately 90 basis points,” Biggs said.

Walmart has been investing heavily in both its stores and e-commerce operations over the past year. The retailer has increased wages and training for employees and added technology to its stores to improve customer service and better manage inventory.

E-commerce growth at Walmart was strong as sales and GMV increased 29% and 36.1%, respectively, including Jet.com and online grocery. 

“We are seeing the benefits of our e-commerce investments,” Biggs said. “During the holiday period, the e-commerce fulfillment network performed very well, supporting record volumes with on-time delivery rates that far exceeded last year. This network is also the backbone of the new free 2-day shipping promise with a $35 minimum order available at Walmart.com. Customers are responding well to this new offer, and ecommerce sales have strengthened since its launch on January 31st. Looking ahead, you’ll continue to see us make investments in e-commerce to drive traffic and improve the customer value proposition.”

This month Walmart announced it’s acquiring outdoorsy retailer Moosejaw for approximately $51 million in an all-cash deal. This followed Walmart’s acquisition of online footwear retailer ShoeBuy last month, which took place by way of Jet.com, a company Walmart itself purchased last summer for $3 billion. With the addition of Moosejaw, Walmart now operates a number of standalone brands, including also Hayneedle Inc., another Jet.com purchase, as well as Sam’s Club.

“While e-commerce is growing rapidly – customers continue to rely on brick & mortar formats,” said Doug McMillon, Walmart CEO. “The supercenter remains the best retail format in the world, and going forward we will continue to leverage these unique assets, even more with initiatives like online grocery, in-store pickup – and others.”

Ten of Walmart’s 11 international markets posted positive comp sales for the year and seven of those markets grew comp sales by more than 4 percent. Comparable sales at Sam's Club rose 2.4 percent excluding fuel.

For fiscal 2018, Walmart expects to earn between $4.20 a share and $4.40 a share, compared with an estimate of $4.33. Sales have started the year slower than expected, due in part to a delay in tax refunds, Biggs said.

Walmart operates 11,695 stores under 59 banners in 28 countries and e-commerce websites in 11 countries. 

 

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