It’s been a harsh winter for Wal-Mart and shoppers alike. After reporting its smallest growth in quarterly sales in almost five years, shares fell approximately 3% before the bell on Thursday, according to Reuters. This is the fifth consecutive quarter of stagnant or negative same store sales, so what's happening? Wal-Mart claims it’s due to bad weather, but could it be something more?
Analysts note that Wal-Mart’s quarter may also have been disrupted by price comparison reports as well as the struggling lower-income consumer base. With further competition in the brick-and-mortar space, how can the world’s largest retailer continue to expand in times like these? Are small format stores the key, or more investments in e-commerce?
Consolidated net sales for the first quarter were $114.2 billion, an increase of 0.8% over last year. Same-store sales dropped by about 20 basis points, while customer visits fell 1.4%, according to the report. As of 1:27 PM ET, shares are down $2.01 to $76.73, a 2.55% decrease.
“Wal-Mart’s underlying business is solid, and I’m confident in our long-term strategies,” said President and CEO Doug McMillon. “We remained focused on growth across the enterprise, especially in small formats like Neighborhood Market in the U.S.”
Wal-Mart’s online sales growth actually beat Amazon’s, and sales worldwide rose approximately 27%. Wal-Mart’s online sales growth rose by 30% to $10 billion during the year ended January 31, beating out Amazon’s 20% sales growth during the year ended December 31, according to The Wall Street Journal. This is the first time in a decade Wal-Mart's online sales growth beat out Amazon's. There won’t be any more weather woes to fall back on now that we're moving into the warmer months. Is e-commerce the key to building the business back up?
“We have the opportunity to create transformative growth through stronger e-commerce capabilities,” continued McMillon. “Our investments are focused on improving customer experience and fulfillment capacity. We’re working to deliver a relevant, personalized, and seamless customer experience across all channels to further grow sales.”
It might have been a slow quarter, but it’s apparent that the company has been trying to keep its sales up with further investments into e-commerce and plans to reduce prices for organic groceries. Are these latest results a sign that Wal-Mart will continue to revamp its strategy?
Stay tuned to DeliMarket TV as we continue our coverage on Wal-Mart’s financial performance.