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MarketScreener Homepage  >  Equities  >  Nyse  >  Walmart Inc.    WMT

WALMART INC.

(WMT)
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Delayed Quote. Delayed Nyse - 02/18 04:00:04 pm
119.63 USD   +1.48%
02:48aWalmart's Holiday Sales Disappoint -- WSJ
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Walmart's Holiday Sales Disappoint -- WSJ

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02/19/2020 | 02:48am EST

Stores stumbled with apparel missteps, but online grocery orders were strong

By Sarah Nassauer 

Walmart Inc. reported sluggish holiday sales despite continued online gains, adding to a string of disappointments from traditional retailers as they adjust to changing shopping habits.

Walmart said U.S. comparable sales, those from stores and digital channels operating for at least 12 months, increased 1.9% in the fourth quarter, a slowdown compared with the 4.2% growth the company reported for the same period last year.

The results showed the world's biggest retailer struggled to get shoppers to spend in its stores during a shorter holiday selling season as it ramped up efforts to compete with Amazon.com Inc. Walmart's U.S. e-commerce sales rose 35% in the fourth quarter, boosted by online grocery orders.

Walmart executives said the holiday season started strong around Thanksgiving but blamed soft sales of toys, videogames and apparel in the weeks before Christmas. Overall, consumer spending was strong last year, government data show, but retailers' profits have been pinched as orders shift online.

"We feel pretty good about the year even though the fourth quarter was not our best," Chief Executive Doug McMillon said during an investor presentation on Tuesday. Store sales suffered from a late Thanksgiving as well as some merchandising missteps, he said.

There was a lack of high-price, in-demand holiday toys, Mr. McMillon said, and Walmart stocked too many inexpensive clothes and too much seasonal attire. "We looked like red and green and could have been more basic and could have had some middle price points," he said. January and February sales overall look stronger so far, he said.

Walmart forecast another year of strong sales growth, predicting U.S. comparable sales will increase at least 2.5% in fiscal 2021 -- after rising 2.8% in the year just ended. It expects U.S. e-commerce growth for the year of 30%, less than the 37% booked in 2020. Operating income fell 12.3% for the fourth quarter, to $5.3 billion, as the company continues to invest in its online operations. Walmart has pinched spending elsewhere, adding more automation to stores and laying off workers at some of its unprofitable e-commerce brands.

Walmart executives used the start of a new fiscal year to share plans to boost profits online, as well as create revenue sources from new ventures such as digital advertising and a bigger health-care business.

Health care, including new store clinics with more medical services, represents another "opportunity that takes advantage of big boxes and big parking lots close to people," Mr. McMillon told investors Tuesday. "We think we can learn how to drive alternative revenue and profit streams by building on our core businesses," he said.

Walmart said it expects e-commerce losses to come in flat to slightly better during the current fiscal year, after several years of increasing losses. Like Amazon, Walmart will seek to expand the number of third-party merchants that pay fees to sell through its website.

To boost that business the company has started to offer Walmart fulfillment services, U.S. e-commerce CEO Marc Lore said. Such programs charge fees to warehouse and ship goods. Walmart shipped the first such package using its own warehouse network last August, a company spokesman said.

Overall, Walmart reported revenue rose 2% to $141.67 billion for the three months ended Jan. 31, including gains in its international markets and its Sam's Club warehouse chain. Net income was $4.14 billion, up 12% from a year ago, including several one-time tax items.

Walmart has fared better than most U.S. retailers in recent years, as the retail giant ramps up online grocery orders and takes market share from smaller chains like Sears that are closing stores. In the U.S., more than half of Walmart's sales are food and groceries, which are less susceptible to consumer swings.

The holiday season has been a disappointment to most traditional retailers. Target Corp. fell short of its own expectations, citing weak sales in toys and electronics. Macy's Inc. recently said it would close another 125 of its department stores.

Due to a late Thanksgiving, there were six fewer days in the 2019 holiday-shopping season compared with 2018, which may have eaten into sales, said retail analysts.

Walmart shares, which are trading near all-time highs, rose 1.5% on Tuesday. The stock rallied roughly 30% last year.

In recent weeks retail analysts have been lowering their expectations for Walmart's sales and profits, after publishing largely optimistic reports last year. Although the quarterly sales growth and profits missed earlier forecasts, the results weren't as weak as some had feared.

For the fourth quarter, Walmart reported adjusted earnings per share of $1.38, below the consensus estimate of $1.44. For fiscal 2021, the company predicted adjusted earnings of $5 to $5.15 a share, a slight increase from 2020, but below Wall Street's expectations of $5.22.

Walmart, which operates hundreds of stores in China, said it continues to monitor the coronavirus outbreak but hasn't included any potential financial effects in its guidance for the current fiscal year. Apple Inc. warned Monday it would miss its March quarter financial targets due to the outbreak.

Corrections & Amplifications Walmart Inc. forecast U.S. comparable sales would rise nearly 3% for its full fiscal 2020 year. An earlier version of this article incorrectly said the company's forecast was for the fourth quarter. (Feb. 18, 2020)

Write to Sarah Nassauer at sarah.nassauer@wsj.com

 

Stocks mentioned in the article
ChangeLast1st jan.
APPLE INC. -1.83% 319 Delayed Quote.8.63%
TARGET CORPORATION 1.03% 117.83 Delayed Quote.-9.03%
WALMART INC. 1.48% 119.63 Delayed Quote.-0.80%
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Financials (USD)
Sales 2021 538 B
EBIT 2021 22 170 M
Net income 2021 14 568 M
Debt 2021 48 810 M
Yield 2021 1,82%
P/E ratio 2021 23,1x
P/E ratio 2022 21,5x
EV / Sales2021 0,72x
EV / Sales2022 0,71x
Capitalization 339 B
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Technical analysis trends WALMART INC.
Short TermMid-TermLong Term
TrendsBullishNeutralBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 35
Average target price 127,67  $
Last Close Price 119,63  $
Spread / Highest target 17,0%
Spread / Average Target 6,72%
Spread / Lowest Target -12,2%
EPS Revisions
Managers
NameTitle
C. Douglas McMillon President, Chief Executive Officer & Director
Gregory B. Penner Non-Executive Chairman
Dacona Smith Chief Operating Officer & Senior VP-Sam's Club
Brett M. Biggs Chief Financial Officer & Executive Vice President
Clay Johnson Enterprise Chief Information Officer & EVP
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