Walmart reports sluggish sales
Retailer blames shortened holiday, social protests
NEW YORK — Walmart reported disappointing fourth-quarter profits and sales after a sluggish and shortened holiday shopping season.
Violent social protests in Chile, where there are hundreds of Walmart stores, cut into international sales.
Walmart also delivered a weak profit forecast for the year and a rare quarterly miss, its worst in about five years.
“We started and finished the quarter with momentum, while sales leading up to Christmas in our U.S. stores were a little softer than expected,” said CEO Doug McMillon.
Walmart is the first major retailer to report fiscal fourth-quarter results. The performance underscores a multitude of challenges that retailers faced this holiday season as they try to better compete with online juggernaut Amazon. The discounter said that U.S. sales at stores opened at least 12 months rose just 1.9% for the holiday quarter, a slowdown from the previous period. The company joined other retailers who reported disappointing holiday sales last month.
It was the shortest holiday shopping season since 2013, leaving retailers scrambling to figure out how to get people thinking about the holidays sooner. The ongoing trade war with China has raised costs for most and now, a new virus in China is hitting a huge customer base as well as manufacturing facilities and supply chains.
The challenges come on the back of a slew of bankruptcies as retailers attempt to satisfy a customer who has gone increasingly online, one who demands speedy delivery and returns.
Walmart, which operates more than 400 stores in China, didn’t include the potential impact of coronavirus in its forecast because of uncertainty over how it will play out over the next year. But executives believe the disruption is likely to shave a few pennies off earnings per share in the current quarter. One blessing: Walmart emphasized that two-thirds of the items it sells — mostly food — are sourced from the U.S. The remainder comes from a variety of countries like Mexico, China and other regions of Asia.
Walmart and Target have stood out among retailers, having ramped up deliveries and other conveniences for customers, but Target Corp. also struggled during the holiday due to weak sales of toys and electronics.
Walmart continued to produce strong results from its grocery aisles, helped by expanded online delivery. It now has 3,200 locations for grocery pickup and 1,600 locations that offer grocery delivery.
Walmart’s same-store sales of 1.9% this quarter were well below the 3.2% increase in the previous period. Online sales in the U.S. rose 35%, weaker than the 41% increase booked in the previous quarter.