Wal-Mart's Online Sales Surge, Tops 1Q Expectations

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19 May, 2017

Wal-Mart Stores on Thursday reported another quarter of positive same-store sales growth in the USA and better-than-expected earnings, suggesting its price-and-service investments were gaining additional traction despite a rough environment for growth.

Wal-Mart's USA same-store sales rose 1.4% in the first quarter - the 11th straight quarterly increase - as the retailer benefited from an increase in store foot traffic. Analysts polled by research firm Consesus Metrix had forecast a rise of 1.3 percent.

Earnings per share came to $1 in the first quarter ended on April 30, exceeding the analysts' average estimate of 96 cents, according to Thomson Reuters I/B/E/S. Brent crude, used to price global oils, climbed 34 cents, or 0.7 percent, at $52.55 a barrel in London.

The world's biggest retailer is accelerating efforts to "combine our digital and physical assets to make our shipping simple and easy for customers", chief executive Doug McMillon said in a statement.

Walmart has been putting a pointed focus on e-commerce with acquisitions over recent months with companies like Jet.com, Moosejaw, Shoebuy, ModCloth, and possibly Bonobos in the near future.

Wal-Mart reported first-quarter profit of $3.04 billion. Comp-store inventory also fell 7.3% despite the 1.4% sales increase, an 8.7-point spread almost as big as the prior quarter's 9.

With shoppers overall less and less willing to wait for their items to arrive, figuring out a shipping strategy that will encourage people to buy more and also drive shoppers to its stores will be a key element for Target.

"There's more product to buy, you're able to get the product quicker", Mr Lore said on a conference call with reporters.

Growth at Wal-Mart's brick-and-mortar stores was more measured, though it still outpaced estimates.

Wal-Mart said it now offers 50 million items through its website, up from 35 million in the last quarter and 10 million from the same time previous year.

The results signal that Wal-Mart is getting a payoff from an ambitious online expansion, which included last year's $3.3 billion acquisition of Jet.com Inc. Vetr upgraded shares of Wal-Mart Stores from a "hold" rating to a "buy" rating and set a $75.31 price target on the stock in a report on Monday, March 27th.

Online sales fuel positive results at Walmart and Alibaba while L Brands struggles with a brand overhaul. The FTSE 100 index of leading British shares was down 0.9 percent. Growth was 29 percent in the fourth quarter. Comparable store sales were down 9 percent, hurt by the exit in swim and apparel at Victoria's Secret. "E-commerce is way ahead of where it was this time past year just in the short eight or nine months he's been running it".

He still sees plenty of room for improvement despite the first-quarter progress. Net sales for Walmart International totaled $27.1 billion, down 3.5 percent from $28.1 billion during the same period of FY17. The company reported seven of its 11 worldwide markets reported same-store sales increases during the quarter. Fort Point Capital Partners LLC raised its stake in Wal-Mart Stores by 0.4% in the third quarter.

In the second quarter, Wal-Mart expected to achieve earnings of around $1.00 to $1.08 per share.

Wal-Mart's strong results show the retailer is benefiting from its $2.7 billion investment to increase entry-level wages and enhance the training of its workforce that has resulted in better stocked shelves and cleaner stores.

"We feel good about the momentum across the business and we expect progress to continue", Chief Financial Officer Brett Biggs said. "The acquisitions are helping us speed some things up".


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