Walmart experienced its most robust same-store sales growth in a decade during fiscal Q2 2019, led by the strong performance of grocery, apparel and seasonal items. Highlights of the results include:
- Comparable sales at stores open for at least 12 months increased 4.5%, supported by traffic and ticket growth each exceeded 2%;
- Sam’s Club comparable sales grew 5%, the biggest increase in six years;
- Net revenue of $128 billion, up 3.8%;
- E-Commerce sales grew approximately 40%; and
- Fiscal 2019 adjusted earnings per share (EPS) reached $4.90 to $5.05 expected, excluding Flipkart.
The retail titan’s e-Commerce growth was partially driven by its expanded online assortment, which included the introduction of 1,100 new brands. Walmart is currently in discussions to add even more brands to the site, and is on track to provide grocery delivery to 40% of the U.S. population by the end of 2018.
Walmart has been making other substantial changes to its e-Commerce experience as well. The retailer:
- Added a shop by style option and expanded the selection across baby products categories;
- Enhanced its grocery pickup with automated carts to speed up the selection process;
- Hired approximately 100 employees for a new Sam’s Club tech office; and
- Named a new president of Jet.com in March 2018.
Partnerships with technology firms have helped Walmart further enhance its online presence. The company recently signed on with Microsoft to work on cloud and AI innovations, and joined forces with JD.com to invest $500 million in Dada-JD Daojia, a Chinese grocery delivery company. Walmart ended its grocery delivery relationships with Uber and Lyft, but now offers the service in Japan through Rakuten.
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“We continue to partner in the areas where it makes sense,” said CEO Doug McMillon in a statement. “The recent announcement with Microsoft is related to our ongoing digital transformation. Our ongoing relationships with Google, Rakuten and JD.com are productive and we enjoy building win/win collaborations to serve customers more effectively.”
Overall net sales at Walmart International were $29.5 billion, an increase of 4% for the quarter. Sales from outside the U.S. currently account for 24% of all revenue, according to Moody’s. International revenue has been growing approximately 3% annually.
The realignment of the international business has included Walmart’s acquisition of Flipkart and the sale of majority stakes in British subsidiary Asda and Walmart Brazil. Taken together, these moves prepare Walmart to tap the explosive online growth expected in India, giving it an advantage over Amazon, according to Moody’s.
“The strategic shift will be expensive, at least initially,” said Moody’s in a research note. “Walmart is taking a $4.5 billion charge to exit Brazil, and is paying $15 billion for the unprofitable Flipkart. But these major moves, which vastly reduce its presence in two significant markets — and going ‘all-in’ in India — show that Walmart is not wedded to assets that don’t fit with its growth strategy.”
