Walmart beat expectations

By Reidar Molthe

17 August 2018 10:52

Walmart beat expectations

The world’s biggest retailer, Walmart, beat analysts’ expectations, sending shares rising with more than 10 percent on New York Stock Exchange (Thursday morning 16 August). If the gains hold, the stock is on course for its biggest intraday increase since 2008.

The mega-retailer, with its headquarter in Bentonville, Arkansas, said that revenue increased 3.8 percent from a year ago to $128 billion. It reported $1.29 in earnings per share excluding one-time items, such as a loss stemming from a sale of its majority stake in Walmart Brazil.

Walmart out of Brazil

Walmart Inc said on Monday that it has sold an 80 percent stake in its Brazilian operations to private equity firm Advent International. For Walmart, Brazil has been a nightmare.

Walmart’s aggressive push into groceries helped same-store sales in the United States grow more in the last quarter than they had in a decade, the retailer said on Thursday, reporting earnings and revenue that beat Wall Street’s expectations. The company’s stock surged more than 10 percent, to $99.98, on news that same-store sales grew with 4.5 percent, far exceeding the 2.4 percent uptick analysts have forecasted. That is still below 109,98 share price in January, according to The New York Times.

Robust e-commerce growth from a low base

Walmart, the largest grocer in the United States and in the world, offers online grocery pickup in more than 1,800 locations and said on Thursday that it expected its grocery delivery service to reach 40 percent of the United States population by the end of the year. Walmart’s battle with rival Amazon escalated this month after the online giant announced a similar grocery pickup service at its Whole Foods stores. The intense competition has left many smaller grocery operators fading.

Following a redesign of its website, Walmart’s e-commerce sales in the United States increased 40 percent in the second quarter from a year earlier, an improvement from the 33 percent the previous three-month period.

During the quarter however, more shoppers visited Walmart’s brick-and-mortar stores in the United States and spent more per basket compared to 2017. The strong results in second quarter led the company to raise its sales and profit expectations for the year.

Strong development in U.S.

Comparable sales at U.S. Walmart stores rose 4.5 percent in the three months ended in July, the company said Thursday, more than double analysts’ estimates. Grocery sales rose the most in nine years thanks to better fresh-food offerings, and web revenue growth.

Walmart has benefited from improved consumer sentiment and not least that tax cuts that have put more money in Americans’ pockets this year. U.S. retail sales rose by more than forecast in July, as shoppers snatched up apparel and school supplies. But investors are still somewhat skeptical that brick-and-mortar retailers can keep pace with online rivals like Inc., evidenced by Macy’s shares plunging Wednesday despite boosting its earnings and sales guidance, writes Reuters.

Doug McMillon, President and CEO of Walmart
Doug McMillon, President and CEO of Walmart

“We’re pleased with how customers are responding to the way we’re leveraging stores and e-commerce to make shopping faster and more convenient,” Walmart Chief Executive Officer Doug McMillon said in a statement. “We’re continuing to aggressively roll out grocery pickup and delivery in the U.S., and we recently announced expanded omni-channel initiatives in China and Mexico.”

Bull on Walmart

“If you are a Walmart bull, there are many reasons to be bullish today,” Brian Yarbrough, an analyst at Edward Jones, said in an interview. “They did benefit from pent-up demand, but let’s give them credit, it was a very solid quarter.”

The sales performance overshadowed ongoing margin pressures driven by investments in cutting prices, higher freight costs due to a shortage of truck drivers in the country and its continued investments in e-commerce. Gross margins fell for the fifth consecutive quarter, according to the company.

Sources: Walmart, Reuters, Bloomberg, NYT

Walmart out of Japan

US giant, Walmart, is not satisfied with its Japanese business and is selling its wholly owned grocery chain; Seiuy. Out of Brazil, out of Great Britain and maybe out of Japan. Globalization is not easy, not even for Walmart.

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