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Walmart Gives Disappointing Outlook As E-Commerce Growth Flags

Published on Feb 20 2018 1:00 PM in Retail tagged: Trending Posts / Walmart / US Retail

Walmart Gives Disappointing Outlook As E-Commerce Growth Flags

Walmart delivered a disappointing annual profit forecast as its once-torrid e-commerce sales growth begins to decelerate and the US tax overhaul provides less of a windfall than expected.

The world’s largest retailer expects earnings of $4.75 to $5 a share this fiscal year, excluding some items, compared with an average Wall Street estimate of $5.13.

Though Walmart’s sales last quarter topped projections, the results reflected a slowdown in online orders - a key metric in its battle to fend off Amazon.

Walmart can’t afford to lose momentum as rival Amazon poaches shoppers and pushes into new arenas like health care. Chief Executive Officer Doug McMillon is trying to convert Walmart’s brick-and-mortar shoppers into online customers, who spend almost twice as much overall and seek out higher-priced items.

He’s also trying to keep employees happy by raising wages and enhancing parental-leave policies, while at the same time closing stores and cutting headcount at its headquarters. Those investments are taking a toll on profit.

“We’re making decisions to position the business for success,” McMillon said in a statement on Tuesday.

The shares fell 2.7% to $102 in premarket trading. They had gained 6.1% this year through Friday’s close.

Earnings Shortfall

Walmart’s adjusted earnings amounted to $1.33 a share in the fiscal fourth quarter, which ended January 31. That was short of analysts’ average projection of $1.37.

But same-store sales - a key measure - provided a bright spot last quarter. They grew 2.6%, compared with the 2% projection tracked by Consensus Metrix.

Walmart said it’s still assessing the impact of last year’s federal tax changes - legislation that’s expected to bring huge benefits to the nation’s retailers. For now, the company is recording a provisional benefit of $207 million for the fourth quarter and full year.

At Walmart’s e-commerce unit, gross merchandise volume - a measure of all the goods it sells online - rose 24% last quarter. That’s less than half the 54% pace of the previous period.

The Bentonville, Arkansas-based company had been getting a tailwind from its acquisition of, an online upstart that it bought in 2016.

News by Bloomberg, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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