Slowing online sales and reduced profits worry Walmart investors

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The company's mixed results raise concerns its push to narrow the gap between itself and Amazon.com Inc. may be losing steam. While sales rose, they did so by less than expected. Its shares tumbled 10 percent.

Walmart's poor quarterly results are the latest evidence of how even the giants of retail are under siege from Amazon. These investments, however, are eating away profits. The company has expanded its assortment, introduced initiatives such as two-day free shipping on items, acquired online retailers like Bonobos and ModCloth, and poured resources into online grocery pickup and other services meant to link the company's online offerings with its network of stores. The company increased seasonal inventory for items such as toys and electronics but ended up out of stock on staples and "more everyday items". In spite of some operational issues, which also eroded growth, a 23% uplift demonstrates that Walmart still has momentum in e-commerce - a contention supported by the company's forecast of 40% growth in the upcoming quarter. However, Walmart is likely to get only 20 percent of the company's share due to objections of other company investors. The stock of International Paper Company (NYSE:IP) earned "Neutral" rating by Citigroup on Tuesday, August 2.

Profitability analysis greatly helps in making investment decision.

In January, the retailer said it would raise the minimum wage for hourly employees to $11 an hour and offered a one-time bonus to store employees as it benefited from the new US tax law.

The selloff was sparked after economic data raised worries the economy may overheat, causing a quick spike in bond yields and concern the Federal Reserve may become more aggressive in raising US interest rates.

But a hot economy has now forced employers to compete for workers who can be more choosy. RBC Capital Markets maintained it with "Underperform" rating and $76 target in Friday, August 19 report.

For the full year, profits plunged 27.7% to $9.86 billion, or $3.28 per share. In partnering with Hudson's Bay-owned Lord & Taylor, Walmart will bring high-end clothing items to its website, in addition to its less-expensive banners, which are also getting a refresh. It has teamed up with Lord & Taylor to create dedicated space on its site.


Walmart has aggressively cut prices and plans to double the number of stores where groceries can be ordered online and picked up curbside this year to 2,000 locations. (NYSE:WMT). Courage Mgmt Ltd Liability Com has 0.29% invested in Walmart Inc.

Walmart has worked quickly to construct its online business over recent years to head off the dominance online of Amazon. After spending $14 billion to acquire Whole Foods last summer, Amazon just announced two-hour delivery from the grocery chain for its members.

Walmart shares ended the United States session 10.17% lower at $94.11. Operating income fell 11% to $1.3B. The hedge fund run by Kevin Michael Ulrich held 147,358 shares of the consumer services company at the end of 2017Q3, valued at $11.52M, down from 158,697 at the end of the previous reported quarter. Both of its revenue and same-store figures exceeded most expectations, the revenue grew was reported to be at $136.3 billion, while the same-store sales managed to hit a whopping 2.6% increase. That was the 14 straight quarter of growth.

The company said the strength was "broad-based" across all merchandise categories and that holiday sales were solid.

The company said much of the slowdown was planned because Jet.com contributed less to the e-commerce sales growth in the quarter after being acquired by Walmart in September 2016.

Doug McMillon, Walmart President & CEO, said: "Walmart U.S. eCommerce sales growth in the fourth quarter was 23 percent, down from 50 percent in the third quarter".

While the focus during the earnings season has previously been in the technology sector it has now moved to the retail industry with particular attention directed at Walmart. Analysts expected revenue of $134.91 billion, for the quarter. First Dallas Secs reported 9,255 shares.

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