Walmart Inc.'s U.S. e-commerce sales surged 43 percent in the fourth quarter, aided by the expansion of grocery pickup and delivery and a broader online assortment of goods, the company said Tuesday.
The world's largest retailer posted net income of $3.7 billion, or $1.27 per share, for the quarter that ended Jan. 31, up from $2.2 billion, or 73 cents per share, in the same period a year ago. Excluding one-time items related to tax changes, equity investment in JD.com and the sale of a majority stake in Walmart Brazil, the company earned $1.41 per share.
Those adjusted figures beat the average earnings estimate of $1.33 per share from 27 analysts surveyed by Thomson Reuters. Likewise, revenue exceeded analysts' estimate of $138.7 billion. Fourth-quarter revenue, including membership fees and other income, rose to $138.8 billion, or 1.9 percent more than 2018's fourth quarter.
Investors responded optimistically to Tuesday's report, sending Walmart's stock as high as $104.18 per share in morning trading on the New York Stock Exchange. Walmart shares rose $2.21, or 2.2 percent, to close Tuesday at $102.20. Shares have traded between $81.78 and $106.21 in the past year.
Walmart President and Chief Executive Officer Doug McMillon noted employees' "great work and openness to change" throughout fiscal 2019.
"Progress on initiatives to accelerate growth, along with a favorable economic environment, helped us deliver strong comp sales and gain market share," he said in a news release.
"We're excited about the work we're doing to reach customers in a more digitally connected way."
Brian Yarbrough, a retail analyst with financial services firm Edward Jones, said Walmart had a very solid quarter, especially in its e-commerce and U.S. same-store sales growth.
"The continued rollout of grocery pickup and grocery delivery seem to be driving some very positive results," he said. Those services generate twice as much in revenue per the average ticket than sales made in stores, he said.
However, the retailer's heavy investments in e-commerce, including its purchase of India's Flipkart Group, offset much of that revenue, Yarbrough said.
"I think the biggest hangup for me is the continued lack of profit growth and the continued losses in e-commerce," he said. "You get both sides of the coin. People will say, 'well, they're investing for the future and eventually it's going to be profitable,' while others are a little more cautious, and I'm probably in the more cautious camp."
Walmart's U.S. division, the company's largest and which includes e-commerce sales, reported net sales of $90.5 billion, up 4.6 percent over last year's fourth quarter. Sales at stores open at least a year, considered a key indicator of a retailer's health, rose 4.2 percent.
Grocery sales were particularly strong, the company said. They were boosted in part by the early release of this month's federal food-stamp benefits because of the partial government shutdown. Also, customers are "responding favorably" to Walmart's pricing strategy and improved private brands, the news release stated.
Walmart U.S. continued to focus on existing stores, remodeling about 90 in the fourth quarter and nearly 500 stores in fiscal 2019.
Also, Walmart now has more than 2,100 grocery-pickup locations nationwide, nearly 800 stores offering grocery delivery and more than 700 stores with pickup towers.
Walmart's international division reported net sales of $32.3 billion, down 2.3 percent from the same period a year ago. However, three of its largest markets -- Mexico, the U.K. and Canada -- saw positive same-store sales growth. China, which is experiencing slower economic growth and increasing competition from online and traditional retailers, saw a slight drop in same-store, or comp, sales.
At Sam's Club, Walmart's warehouse club division, net sales including fuel fell 3.7 percent, totaling $14.9 billion. Same-store sales, excluding fuel, grew 3.3 percent while traffic increased 6.4 percent.
Online sales grew 21 percent from the same quarter a year ago. Income from club membership rose 2.2 percent over last year's fourth quarter, and an upward tick in memberships kept the count flat despite the closure of nearly 10 percent of Sam's Club stores nationwide.
For the 2019 fiscal year, Walmart reported net income of $6.7 billion, or $2.26 per share, compared with $9.9 billion, or $3.28 per share, for the previous year. However, adjusting for one-time items brings net income to $4.91 per share.
Revenue for the fiscal year grew 2.8 percent to $514.4 billion. Walmart U.S. e-commerce sales increased 40 percent.
Walmart returned $13.5 billion to shareholders during the fiscal year through dividends and share repurchases, down 6.3 percent from the previous year. Walmart's board of directors has approved an annual cash dividend for fiscal 2020 of $2.12 per share, about 2 percent more than the $2.08 per share paid last year.
The company reaffirmed the fiscal 2020 guidance it gave at an Oct. 16 meeting for investors. Earnings per share are expected to range from $4.65 to $4.80.
Business on 02/20/2019