Global retail major Walmart on Tuesday reported weak results for the fourth quarter of Financial Year 2019-20 indicating it was losing business to e-commerce giant Amazon. The results also take into consideration its Indian operation through Flipkart.
The company's total revenue rose 2.1 per cent to $141.67 billion, missing the estimate of $142.49 billion.
According to Reuters, the holiday sales for brick-and-mortar retailers were disappointing as 2019 saw a majority of shoppers switch to online buying, helping Amazon report "record" sales for the period. "Walmart's shockingly bad results for its all-important holiday shopping quarter indicate that some of the company's recent investments to bolster its e-commerce operations have failed to materialize," Reuters quoted Jesse Cohen, senior analyst at financial markets platform Investing.com as saying.
Reports suggest that in its home market, Walmart’s subpar holiday season was due to softness in apparel, toys, and gaming.
The upcoming year is crucial for the world’s largest retailer, which has made major investments under Chief Executive Officer Doug McMillon to lower prices, expand its e-commerce operations and enhance employee wages and benefits. The company said it expects online sales to grow about 30 per cent in FY20-21, down from last year's growth of 37 per cent.
For the holiday quarter, the company reported a 35 per cent rise, its slowest in nearly two years.
Shares of the Bentonville, Arkansas-based retailer, which rose 27 per cent in 2019, fell 1 per cent in early trading on Tuesday.
Walmart has been spending heavily to grow its online business and build up the digital capabilities of its stores, through services that help shoppers buy groceries online for pickup in-store parking lots. "In the few weeks before Christmas, we experienced some softness in a few general merchandise categories in our US stores," Chief Financial Officer Brett Biggs said. The company forecast full-year profit to be between $5 and $5.15 per share, below expectations of $5.22.
Sales at Walmart's U. S. stores open at least a year rose 1.9 per cent, excluding fuel, in the fourth quarter ended Jan. 31, well below analysts' average estimate of 2.35 per cent. "Walmart's weak guidance outlook for 2021 indicate that more storm clouds are on the horizon, even without accounting for the effects of coronavirus' spread," Cohen said.