As traditional department and specialty store retailers falter and succumb to Amazon’s ever-growing might, Wal-Mart Stores Inc. is staring down the online beast. Doug McMillon, the retailer’s president and chief executive officer, made that clear as he discussed its fiscal 2018 first quarter performance during a conference call this morning as Wal-Mart stock teetered between a positive and negative 1 percent after the earnings were released.
Wal-Mart bested analyst expectations by delivering solid results for the first quarter ended April 30, although profits declined 1.3 percent to $3.039 billion, from $3.079 billion due to an increase in tax rate, the retailer said.
Earnings per share rose to $1 in the fiscal year 2018 first quarter, from 98 cents in the year-ago period. The Thomson Reuters consensus was 96 cents a share. Net sales increased 1.4 percent to $117.5 billion, from $115.9 billion in the 2017 first quarter. Analysts were expecting net sales of $117.4 billion for the period.
Wal-Mart U.S. comp-store sales rose 1.4 percent, driven by a traffic increase of 1.5 percent. Comp traffic increased 3 percent on a two-year stacked basis. E-commerce growth at Wal-Mart U.S. was strong with sales and GMV increasing 63 percent and 69 percent, respectively. The majority of the growth was organic, the company said, occurring through walmart.com.
Without naming Amazon, McMillon boasted about Wal-Mart U.S. e-commerce performance.
“We like the traction at Wal-Mart U.S. e-commerce,” McMillon said, and in a reference to Amazon’s $99 a year Prime membership for unlimited free shipping, added, “We made changes to the shipping terms, there’s no more fee to get free shipping and we’re offering pickup discounts on non-store items that are shipped to stores. It saves customers money on their orders. Walmart.com now has 50 million first- and third-party items compared to 10 million at this time last year.
“We’re moving faster to combine digital and physical assets,” said McMillon. “We also see plenty of room to improve. We need to scale e-commerce faster and improve store counts.”
McMillon noted that Wal-Mart is “gaining critical category expertise in higher-margin areas like shoes and apparel. We’re not planning to buy our way to success. The acquisitions are helping us speed some things up.”
Net sales at Wal-Mart International declined 3.5 percent to $27.1 billion in the 2018 first quarter, from $28 billion in the 2017 period. The company generated $5.4 billion in operating cash flow and returned $3.7 billion to shareholders through dividends and share repurchase.