U.S. retailer Walmart Inc (NYSE:WMT) posted a lower-than-anticipated quarterly profit and reported a sharp decline in web sales growth during the major holiday period, leading its shares tumble sharply. Even as comparable sales in the United States market surged for the 14th successive quarter, the company’s web sales grew 23% in the holiday quarter, as compared to 29% in the comparable period a year earlier and 50% sequentially from Q3. It was also behind the Amazon.com, Inc. (NASDAQ:AMZN) North American sales growth of 40% during the holiday quarter.
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Walmart reported that much of the web slowdown was intended as growth supported by its acquisition of Jet.com starts to lessen. Sales were also dampened by problems related to inventory stocking. Doug McMillon, the CEO, expressed that it struggled to balance inventory on online platform. It didn’t stock enough everyday products as it added more of holiday merchandise including electronics, gifts and toys, which hurt sales.
The firm reported annual e-commerce revenue of around $11.5 billion in the U.S. but lost money. McMillon anticipates e-commerce losses in 2018 to be “about the same” as preceding year. Walmart reported that it is investing more in its online platform on a national basis and lowering marketing investment in Jet.com. The cost to acquire a new customer and market is cheaper with the company’s brand on a countrywide basis as compared to Jet, which targets millennial and high-income urban shoppers. McMillon stated Jet, which it bought for $3.3 billion in 2016, will fail to grow as fast as it did in initial days.
Discounting special items that hurt profits like restructuring charges and an impact from providing a one-time bonus to staff, EPS came at $1.33 in the fourth quarter closed January 31. The average analyst projection was $1.37 per share. Net income declined 42.1% to $2.18 billion.
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