While last week provided some discouraging, but potentially skewed, numbers related to sinking December retail sales, Walmart saw significant Q4 growth, suggesting that shoppers were spending for basics and lower-end goods vs. luxury items.
The retail giant saw U.S. comparable sales rise 4.2%, beating Wall Street analyst expectations of 3.2%, and also saw adjusted earnings per share ($1.41 vs. $1.33) and revenue ($138.79 billion vs. $138.65) outperform expectations. Online sales jumped 43% during Q4, matching growth during the previous quarter. The holiday quarter pushed Walmart to its 2018 e-Commerce sales growth target of 40%. Full-year U.S. comparable sales growth reached 3.6%, Walmart’s strongest in 10 years.
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The company is targeting e-Commerce sales growth of 35% for the coming year, which won't be as robust as what it was able to achieve last year. But the company is committed to spending to ensure growth continues: with $11 billion in capital expenditures anticipated for store remodeling, customer-facing initiatives, e-Commerce and supply chain in 2019.
Online grocery has been a significant contributor to online growth for Walmart, generating “mid-single digit” growth increases, the retailer reported. Currently, the company is working with seven grocery delivery partners as part of plans to double its grocery delivery footprint to 1,600 stores by the end of 2019. The retailer has existing agreements with DoorDash and Postmates, and forged new agreements with Point Pickup, Skipcart, AxleHire and Roadie in January and Spark in September 2018.
Buy online/pick-up in store also has contributed to Walmart’s e-Commerce growth, with 2,100 stores presently equipped for grocery pickup, increasing to 3,100 by the end of 2019.
"We're making progress in e-Commerce," CEO Doug McMillon said on a call with analysts and investors. "Our focus remains on earning repeat visits and strengthening our assortment of merchandise.” McMillon indicated that shoppers who buy both in stores and online are spending 2X as much as those who exclusively purchase from one channel.
“Walmart is proving the Amazon-driven, retail apocalypse storyline is a myth,” said Jack O’Leary, Senior Retail Analyst at Edge by Ascential, in commentary provided to Retail TouchPoints. “Reinvented and nimble omnichannel players have distinct advantages against Amazon when they leverage their physical store networks, focusing on the shopping experience there by layering on convenient digital capabilities in fulfillment, offering refreshed and differentiated assortment and building on pre-existing brand equity with shoppers.”
Walmart is maintaining its sales outlook for 2019, predicting U.S. same store sales to rise 2.5% to 3%.
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