Walmart delivered a disappointing annual profit forecast as its once-torrid e-commerce sales growth begins to decelerate and the U.S. tax overhaul provides less of a windfall than expected.
Walmart has worked quickly to construct its online business over recent years to head off the dominance online of Amazon.
Walmart's online business has grown rapidly in the past year. Ecommerce sales and GMV at Walmart U.S. for the fiscal year grew 44 percent and 47 percent, respectively.
Well, because Walmart's e-commerce segment was expanding much faster in previous quarters. The company's online sales grew by 23% during the holiday season quarter, but its biggest competitor, Amazon, outpaced it by increasing sales at the same time by 38%.
"We're learning how to deal with higher volumes and learning how to deal with a higher peak than what we had previously", said McMillon on a call with analysts.
Online revenue actually grew by 23% in the fourth quarter, but that's less than half of the 50% growth recorded in the third. The global e-commerce giant is the largest Internet company in the world by revenue, earning US$177.86 billion in revenue in 2017, and its Founder and CEO Jeff Bezos may just be the richest man in history. But Walmart has more than one online pedal it could hit, as the company builds out both its Walmart.com and Jet.com businesses.
A sharp drop in Walmart shares weighed heavily on the Dow and the S&P 500 on Tuesday to put a six-session winning streak in jeopardy, but gains in Amazon and technology stocks helped lift the Nasdaq.
Yarbrough of Edward Jones was less optimistic Walmart will reach the 40 percent goal, calling it "pie in the sky".
Walmart also announced the closing of 10% of Sam's Clubs in the US earlier in 2018 and has slowed down its openings of new Walmart locations to focus on the growth of e-commerce.
"They're doing well", Yarbrough said.
Walmart global net sales were $33.1 billion, increasing 6.7 percent year over year.
In the company's fourth-quarter report published on February 20, Walmart revealed that it had missed earnings expectations for the quarter, earning $2.17 billion as compared to $3.75 billion earnings from the same quarter previous year. The firm operates discount stores, supermarkets, supercenters, hypermarkets, warehouse clubs, cash and carry stores, home improvement stores, specialty electronics stores, apparel stores, drug stores, convenience stores, and membership-only warehouse clubs; and retail Websites, such as walmart.com and samsclub.com, as well as mobile commerce applications. The company had Year Ago Sales of 130.94 Billion.
It was no great surprise to see a solid set of financial results for Walmart this morning, with Q4 sales growth standing at 2.1%. Sam's Club sales, excluding fuel, increased 2.2% to $54.5 billion, with comp up 2.0%.
For fiscal year 2019, Walmart forecasts an EPS of $4.75 to $5.00 on an estimated same store sales growth of 2 percent in U.S. Walmart locations.
The company said Tuesday that its federal corporate tax rate for the current year will be between 24 and 26 percent due to the new tax reform. Consolidated net income fell 42.1% to $2.175 billion. For now, the company is recording a provisional benefit of $207 million for the fourth quarter and full year.