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Walmart Online Growth Leaps 50%, Lifts Annual Profit Guidance

Walmart Online Growth Leaps 50%, Lifts Annual Profit Guidance

Walmart is on a roll as it continues to reap the benefits of its e-Commerce push, seeing 50% online sales growth in Q3. The total remains well ahead of Walmart’s 40% e-Commerce growth projections for 2018.

The post-Jet.com acquisition era has been fruitful for Walmart, with the retailer experiencing online sales growth of 63% in Q1 and 60% in Q2, and same-store sales climbing for the 13th straight quarter at a rate of 2.7%. With this holiday season looming, Walmart raised its full-year guidance for adjusted earnings per share, increasing it from a range of$4.30 to $4.40 to a new range of $4.38 to $4.46.

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The earnings report came only three days after Walmart officially confirmed that Lord & Taylor will launch a flagship store on Walmart.com in spring 2018. In opening the floodgates to this “online mall,” Walmart could further expand its potential customer base and lead the way for more major brands to sell under the Walmart flag. The online mall launch will coincide with a retooling of its e-Commerce site design to provide more focus on the top one million Walmart.com SKUs. Over the past year, the retailer has tripled the number of items on Walmart.com to reach more than 70 million SKUs today.

Walmart generated $123.2 billion in total global revenue in Q3, a $5 billion year-over-year increase (4.2%). Shoppers are spending more on individual purchases, with the average ticket at U.S. Walmart stores increasing 1.2%. Now the main concern is ensuring that deep discounts don’t get in the way of long-term profits.

“U.S. revenues increased a meaningful $3.2 billion, though they came at a cost as Walmart’s aggressive pricing strategy amid its battle for market share with lower-margin Amazon, coupled with its ongoing investments, depressed both gross and operating margins,” said Charlie O’Shea, Lead Retail Analyst at Moody’s, in commentary provided to Retail TouchPoints. “We expect this pricing environment to continue throughout the holiday season as this season is shaping up as potentially more promotional than even last year.”

Grocery continues to be a key component in Walmart’s brick-and-mortar growth. Walmart said its grocery categories delivered the strongest quarterly comparable sales performance in nearly six years, with fresh meat, bakery and produce providing a strong push. But grocery will continue to play a greater role in online shopping as well — Walmart expects to add 1,000 online grocery pickup locations in the U.S. by the end of 2018, which would nearly double the present total of 1,100.

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