Walmart shares jumped 3.6% Tuesday to their highest level this year after the world&a;rsquo;s largest retailer reported better-than-expected holiday quarter sales and profit and kept its outlook for the year.
The company said its comparable sales in the U.S., its top market and a key investor focus, rose 4.2%, helped by a 43% jump in online sales. On a two-year stack basis, Walmart said its U.S. comparable sales posted the biggest growth in nine years.&l;span&g;&a;nbsp; &l;/span&g;
Walmart&s;s results also gave some comforting signs about the general U.S. retail outlook and painted&a;nbsp;a mixed picture of winners and losers after the U.S. Commerce Department recently reported an unexpected decline in December retail sales and after holiday sales from retailers like Macy&a;rsquo;s fell short.
Here are some other key takeaways:
&l;strong&g;Walmart&a;rsquo;s key weapon against Amazon will continue to be groceries.&a;nbsp;&l;/strong&g;Expanded grocery pickup and delivery, on top of a broader assortment, played a key part in the 43% jump in Walmart&a;rsquo;s U.S. e-commerce sales, the company said, adding that it&a;rsquo;s gained grocery market share. Walmart plans to increase grocery pickup by 1,000 locations this year, to 3,100, and double grocery delivery to 1,600 locations.
&a;ldquo;The mix of new customers in online grocery is positive and encouraging,&a;rdquo;&a;nbsp;Walmart president and CEO Doug McMillon said on a conference call Tuesday.&a;nbsp;&a;ldquo;Those who shop both in store and online spend twice as much in total and spend more in stores.&a;rdquo;
&l;strong&g;Expect more Walmart action on the apparel and home front. &l;/strong&g;While Walmart is counting on e-commerce to be a key U.S. growth driver, management acknowledged losses from the online business will continue to increase this year. What may change that? Walmart has &a;ldquo;a great sense of urgency to increase sales&a;rdquo; in areas like the home and apparel categories, which are more profitable, CFO Brett Briggs said on the call. A case in point, on Walmart.com, Ellen DeGeneres&a;rsquo; new exclusive fashion line, EV1, was featured at the top of the&a;nbsp;home page. Also prominently showcased was Walmart&a;rsquo;s &l;a href=&q;https://www.forbes.com/sites/warrenshoulberg/2019/02/08/walmart-goes-modrn-two-years-too-late/&q;&g;new furniture and home furnishings line MoDRN&l;/a&g;.
&l;strong&g;Walmart&s;s $16 billion purchase of the Indian&a;nbsp;online retailer Flipkart remains a point to watch.&l;/strong&g;&a;nbsp;With&a;nbsp;India&a;nbsp;&l;a href=&q;https://www.wsj.com/articles/indias-tighter-e-commerce-rules-frustrate-amazon-and-walmart-plans-11545907173?mod=article_inlinetighten%20ecommerce%20rules%20to&q; target=&q;_blank&q;&g;reportedly&l;/a&g;&a;nbsp;having begun to forbid foreign companies like Walmart and Amazon to sell their own products through their affiliated entities in the country&a;mdash;where both retailers have placed big bets&a;mdash;the potential Flipkart impact was a key discussion point on the conference call. Briggs said that while there was &a;ldquo;some disruption to business,&a;rdquo; Walmart doesn&a;rsquo;t &a;ldquo;currently expect there&a;rsquo;ll be any significant impact.&a;rdquo;
&a;ldquo;We remain optimistic about the e-commerce opportunity in India given the size of the market&a;rdquo; and low penetration of e-commerce, McMillon said on the call, adding that Walmart plans to work with the&a;nbsp;Indian government on &a;ldquo;pro-growth&a;rdquo; initiatives. &a;ldquo;We are disappointed with the recent change in law and lack of consultation. &a;hellip; We hope for a collaborative regulatory process to result in a level playing field.&a;rdquo;
Walmart projects its consolidated operating income this year will decline because of the Flipkart acquisition.
&l;strong&g;Expect to see more robots at Walmart stores.&l;/strong&g;&a;nbsp;In another sign that &l;a href=&q;https://www.forbes.com/sites/andriacheng/2019/01/20/six-key-retail-tech-trends-to-watch-for-2019-and-its-not-just-about-amazon/#3a25733c66fc&q;&g;retailers will use technology&l;/a&g;&a;nbsp;to help free up employees from menial tasks so they can spend more time servicing customers, Walmart said it had used more robots at its stores for tasks including scanning inventory on shelves and &l;a href=&q;https://blog.walmart.com/innovation/20181004/youll-never-believe-whos-scrubbing-the-floors-at-walmart&q; target=&q;_blank&q;&g;cleaning floors&l;/a&g;. And the company said that last year it had added 17,000 virtual reality devices to train employees. &a;ldquo;We are using technology to change the way we work,&a;rdquo; McMillon said. It&s;s the&a;nbsp;&q;g&l;span&g;amification of educational experience.&q;&l;/span&g;
Perhaps even more importantly, the company expects these tools to help it &q;leverage&q; expense.
&l;em&g;&l;strong&g;Related: &l;/strong&g;&l;/em&g;&l;a href=&q;https://www.forbes.com/sites/andriacheng/2019/01/20/six-key-retail-tech-trends-to-watch-for-2019-and-its-not-just-about-amazon/#3a25733c66fc&q; target=&q;_self&q;&g;&l;em&g;&l;strong&g;Six retail tech trends to watch in 2019 that go beyond competing with Amazon&l;/strong&g;&l;/em&g;&l;/a&g;
&l;strong&g;&l;em&g;Related: &l;a href=&q;https://www.forbes.com/sites/andriacheng/2019/01/13/why-amazon-go-may-soon-change-the-way-we-want-to-shop/#26fca6fc6709&q; target=&q;_self&q;&g;Why Amazon Go may soon change the way we shop&l;/a&g;&l;/em&g;&l;/strong&g;&l;/p&g;
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