Walmart recently reported stronger than expected earnings, propped up by a large increase in selling products online. America’s largest brick-and-mortar retailer said the value of all of its sales from online jumped by 69% compared with the same period last year. This is in part due to Walmart’s acquisition of Jet.com for $3.3 billion, as well as a couple of other companies already in the online space. Internet sales for Walmart is growing at the fastest pace in at least five years. According to Bloomberg, the adjusted earnings for the most recent quarter was $1 a share, which is higher than the analysts’ forecast of $0.96. Much like its online sales, grocery sales also improved from the previous quarter.
Walmart now has 50 million items on its website, an increase of 15 million compared to the previous quarter. Plus the retailer offers free two-day shipping on orders of $35 or more. This has boosted site traffic and spending, executives said. Walmart’s sales have gained for 11 quarters in a row.
Here are some highlights from the company’s fiscal 2017 performance so far.
- Annual revenue approached $486 billion with operating income of approximately $22.8 billion;
- Operating cash flow reached a record level of $31.5 billion and return on investment was 15.2 percent;
- Walmart operated nearly 11,700 stores serving more than 260 million customers every week;
- The company returned $14.5 billion to shareholders through dividends and share repurchases.
Doug McMillon, President and Chief Executive Officer, Walmart Stores (NYSE:WMT), says in a paper to investors that “historically, new stores have been the key contributor to Walmart’s growth. Going forward, more growth will come from comp sales at existing stores. By leveraging technology, executing more frequent remodels and providing more sophisticated training to our associates, we’ll deliver a better experience to customers. We plan to open fewer stores overall, particularly in the U.S., which should improve our returns on capital over time. We’re also focused on accelerating e-commerce sales through our growing family of brands and the rapid expansion of marketplace, which can benefit the profitability mix of e-commerce.”
Walmart has 4 main objects that it is focusing on this year. First, it wants to make every day easier for busy American families by making the their shopping experience fast, easy and seamless. The second objective is to become more of a digital enterprise. It’s working to increase productivity with more efficient internal processes and finding new ways to improve real time information tracking. The third goal is to be smart with how it allocates capital so it can drive long-term value for its shareholders. Finally the fourth objective is to be the most trusted retailer for consumers. The way it plans to earn more trust is through its associates being creative, curious, ethical, service oriented, and driven to produce results.
With the internet being more ubiquitous than ever, having an online presence is no longer just an option if retailers want to stay competitive in the long run. Walmart appears to understand this and its efforts to expand online seem to be paying off.
Wal-Mart Stores, Inc. operates in all 50 states and internationally, including Puerto Rico. It also operates in 27 countries including, but not limited to, Argentina, Brazil, Canada, Chile, China, Costa Rica, El Salvador, Guatemala, Honduras, India, Japan, Mexico, Nicaragua, South Africa and the United Kingdom.
This author does not own any shares of WMT and does not plan to buy any within 72 hours of writing this post.