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Walmart's E-Commerce Sales Prove a Bright Spot as It Expands In-Store Delivery Service
2020-2-19 12:28:58, Jennifer Waters

Walmart's e-commerce sales, mostly from rising grocery orders, are proving to be a bright spot for the world's largest retailer, and it's equipping more sites for in-store pickups to bring customers into brick-and-mortar locations.

The Bentonville, Arkansas-based chain said e-commerce sales surged 35% in the fourth quarter, even though in its overall results the chain joined other major retailers that fell short of Wall Street analysts' expectations.

Walmart now has more than 3,200 of its 7,600 stores nationwide armed for in-store pickup, 1,600 of which offer grocery delivery. The company has invested millions in growing and fine-tuning its digital sales platform with more improvements to come, including a single app for all purchases throughout the store.

The rare miss of analysts' expectations puts pressure on the chain, especially after competitor Amazon had a 21% jump in fourth-quarter sales, providing momentum for the Seattle-based e-commerce retailer to expand its real estate footprint and speed up delivery times. Executives at Walmart repeated their stance to analysts that investments in e-commerce and technology throughout store operations would hurt its profit margins, but said those losses are expected to level off.

Despite a robust start to the crucial shopping season, Walmart said sales of typical big-hitter gifts such as apparel, toys and video games were sluggish, repeating much of what competitor Target reported last month. Walmart said its same-store sales climbed 1.9% in the quarter, a notable decline against the year-earlier period when sales at stores open longer than a year rose 4.2%.

Though slower than anticipated, Walmart posted its 22nd straight quarter of gains in same-store sales, an important industry metric: “We feel pretty good about the year even though the fourth quarter was not our best,” CEO Doug McMillon said during an investor conference call after earnings were announced.

Even so, Walmart projected a softening in percentage increases to 30% in e-commerce sales for the 2021 fiscal year, which McMillon said should reach $50 billion. The company plans to expand its curbside pickup at Supercenter stores and is looking to adapt pay-as-you-shop apps that allow a customer to sidestep long lines at the cashier.

Despite a strong sales showing throughout the Black Friday weekend, the big-box retailer said traffic at stores was weaker than expected. Much of that could be tied to the shortened holiday spending period between Thanksgiving and Christmas this past year, the least amount of days possible based on the calendar.

Macy’s, Kohl’s and Pier 1 Imports are among the retailers that have already said they are taking action because of unexpectedly slower sales over the holiday, and analysts widely expect other major retailers to report the same as earnings start trickling out.

Retailers are facing challenges brought on by shifts in consumer spending behavior and Amazon’s aggressive push into more corners of the industry. Where other retailers lagged, Amazon boasted it had its best holiday sales ever.

Walmart executives talked up its opportunities to grow e-commerce and to make shopping in any form at Walmart and Sam’s Club a seamless experience during the investor conference.

“The business is becoming more and more omni as the customer is becoming more and more omni,” Chief Financial Officer Brett Biggs told analysts.

The company plans to significantly expand its distribution and fulfillment centers to better accommodate delivery services, including in-home delivery. In the past few years, it has converted some Sam’s Club warehouses to fulfillment centers. Last month, the membership chain announced that it was leasing a 750,000-square-foot distribution center, its first company-operated fulfillment site in Southern California.

Walmart's net income rang up at $4.14 billion, or $1.45 a share, while revenues advanced 2.1% to $140.6 billion. The company made a number of operating cuts last year, ranging from layoffs at its Bonobos stores to finding new bags that were $60 million cheaper than what it was using and saving 15% on the costs of employees’ vests.


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