Walmart’s Influence on E-commerce
Wal-Mart’s sales soared in Q4, and e-commerce sales in the US increased 69%
Walmart (Walmart) announced that sales soared in the fourth quarter, but earnings were lower than expected due to the costs associated with the new crown pneumonia epidemic and continued investment in e-commerce, and pointed out that it expects its sales to increase moderately this year.
The retail giant also announced that it will increase the wages of 425,000 U.S. employees to $13 to $19 per hour from March 13, depending on the location and region of the store.
By then, the average hourly wage will reach more than $15, but the minimum starting wage for workers will remain at $11 per hour.
John Furner, President and CEO of Walmart America, said in a letter to employees: “This is an investment in our employees. At the same time, we have made new innovations in supply chain, automation and technology. Investment. We started to take other actions last year, including special bonuses for fighting the epidemic, raising the salaries of 165,000 key leadership positions, and reorganizing the store’s work model on a team basis.”
As of the fourth quarter on January 31, Wal-Mart had a net loss of US$2.09 billion, or US$0.74 per share, while its profit in the same period last year was US$4.14 billion, or US$1.45 per share. The retailer stated that losses in its UK and Japan operations reduced earnings per share by $2.66.
Adjusted earnings per share were $1.39, which was lower than analysts’ estimates of $1.51. The reason is that the continuation of the new crown pneumonia epidemic has affected costs, causing Walmart to spend US$1.1 billion on epidemic-related costs this quarter.
Wal-Mart’s total revenue in the fourth quarter increased by 7.3% to 152.1 billion US dollars, higher than Wall Street’s estimate of 148.51 billion US dollars.
Same-store sales of Wal-Mart in the United States increased by 8.6%, and sales in most major categories were higher than analysts’ forecasts of 5.6%. E-commerce sales in the US market increased by 69%.
2020 ranking of the top ten online retailers in the U.S.
Same-store sales of Wal-Mart’s Sam’s Club increased by 10.8% in the United States. E-commerce sales increased by 42% and membership increased by 12.9%, the strongest growth in six years.
For the whole year, Wal-Mart’s total revenue increased by 6.7%, reaching 559.2 billion US dollars. Wal-Mart America’s sales increased 8.6%. Sam Club’s sales increased by 11.8%.
Wal-Mart’s capital expenditure in the new fiscal year 2022 is expected to be close to 14 billion U.S. dollars, and will include continued investment in building supply chain capabilities, automation, and ways to improve the customer experience.
Wal-Mart’s Chief Financial Officer Brett Biggs said at the company’s Investor Day press conference that this amount is higher than Wal-Mart’s conventional investment of US$10 billion to US$11 billion. These improvements may make online sales more efficient and profitable.
Doug McMillon, President and CEO of Wal-Mart, said: “The changes in the retail industry in 2020 have accelerated. The capabilities we have established in the past few years have allowed us to lead, and we will stay ahead. This is a more proactive approach. At the moment, because we saw the immediate opportunity. The strategy, team and capabilities are in place. We have close contact with our customers and our financial position is very strong.”
Wal-Mart plans to increase its dividend by one cent to 55 cents per share. The company also approved a $20 billion stock repurchase program.
Wal-Mart expects that the year-on-year growth rate of Wal-Mart’s US sales in fiscal 2022 will remain in the low single digits (excluding fuel sales), and the growth rate of net sales will also remain in the low single digits.
Wal-Mart expects earnings per share to decline slightly. The consensus on Wall Street is that Wal-Mart America’s sales may fall by 0.1%, with earnings per share of $5.75, an increase of about 3%.
Wal-Mart pointed out: “The assumptions in the guidance depend on the duration and intensity of the global new crown pneumonia epidemic, the timing and effectiveness of global vaccines, the scale and duration of economic stimulus, as well as employment trends and consumer confidence.
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