Walmart Says Its Online Sales Will Explode Next Year Amid War With Amazon
The world’s largest retailer, for years slow to respond to Amazon.com (AMZN) in the digital wars, has been on a tear in recent quarters, helped by the $3 billion acquisition of jet.com and overhaul of its marketplace last year, and by better integration of its stores with its digital business. The result was a 60% growth in U.S. e-commerce sales at its namesake chain last quarter.
And Walmart says domestic e-commerce sales should rise 40% in the fiscal year ending in early 2019. Last year, Walmart tapped jet.com CEO Marc Lore to head up its U.S. efforts after online sales growth had slowed under his predecessor. The company has also been on a shopping spree, snapping up smaller e-commerce players like ModCloth, Moosejaw, and Bonobos.
“We’re combining the accessibility of our stores with eCommerce to provide new and exciting ways for customers to shop,” Wal-Mart Stores CEO Doug McMillan said in a statement ahead of the retailer’s annual investor meeting.
Walmart had redoubled its efforts to integrate stores and digital, introducing initiatives such as offering shoppers discounts if they pick up an online order in a store, and introducing express lanes for drug prescription pick-up and merchandise returns. Walmart now has grocery pick-up at 1,000 of its 4,700 U.S. stores, firepower that is essential as it competes with Amazon’s Prime Now and that retailer’s recent acquisition of Whole Foods Market, which gave it 300 new physical distribution points.
And bucking the trend in a retail industry where many rivals are paring their store fleets, Walmart said it plans to open a few more stores: it expect to open fewer than 15 SuperCenters in the U.S. next year, a small uptick to be sure, but additional physical facilities to support its roughly $15 billion a year e-commerce business.
Walmart expects total net sales to rise at least 3% in fiscal 2019, and said it had expected to buy back $20 billion of its shares over two years, a significant chunk of its $240 billion market capitalization.
Wal-Mart Stores, the retailer’s parent that also operates the Sam’s Club chain, said it expects profit for fiscal year 2019 to increase about 5% over the expected adjusted earnings of $4.30 to $4.40 per share for the current fiscal year. That likely reassured investors who watched Walmart sacrifice profits for a couple of years as it gave workers raises and invested heavily in e-commerce to better compete online and in stores.
Of course, however promising Walmart’s results, Amazon remains formidable, something Wall Street analysts noted.
“We still believe Amazon’s lead in online retail is insurmountable,” said Moody’s retail analyst Charlie O’Shea. “However, Walmart continues to widen the gap between itself and all other brick-and-mortar retailer by leveraging its unmatched physical resources.”