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VOL. 41 | NO. 19 | Friday, May 12, 2017
Wal-Mart's online sales surge, tops 1Q expectations
BENTONVILLE, Ark. (AP) — Wal-Mart delivered first-quarter earnings that show how it's winning over shoppers at stores and online, even in an increasingly competitive retail landscape.
The world's largest retailer beat Wall Street estimates and delivered another solid gain in comparable-store sales. Customer traffic at Wal-Mart also rose while other major retailers like Macy's and Target suffered declines.
And online sales surged 63 percent, more than doubling the previous quarter's digital sales. The majority of the online sales growth was organic through Walmart.com.
Wal-Mart, like other traditional retailers, has played catch-up to Amazon.com and other online companies. It has retooled how it operates online and accelerated that shift by buying already successful online operators.
Wal-Mart spent more than $3 billion for Jet.com in its bid to lure younger and more affluent customers. Then it bought ShoeBuy.com for $70 million and the outdoor and gear seller Moosejaw for $51 million. In March, it bought the trendy clothing seller ModCloth. The clothing sites are operating as stand-alone operators and appeal to millennial shoppers.
Wal-Mart also raised its stake in JD.com, China's No. 2 e-commerce site.
Under Marc Lore, the founder of Jet.com who is now CEO of Walmart.com, the company is still looking for new startups to buy. Since he joined the company, the number of items available on its third-party online marketplace has soared to more than 50 million. That's up 10 million from a year ago. Wal-Mart is working to accelerate the integration between Wal-Mart.com and Jet.com, and trying to take advantage of its scale in areas like shipping.
It's also aggressively hunting Amazon shoppers, scrapping a fee-based shipping program earlier this year in favor of free, two-day shipping for online orders of its most popular items with a minimum purchase order of $35.
Amazon Prime costs $99 a year, but comes with services like streaming music and video. Amazon has countered, lowering the free-shipping minimum purchase price for non-members.
In April, Wal-Mart also began offering discounts on thousands of online-only items when customers elect to have them shipped to one of the company's stores for pickup — cheaper for the company than delivering to people's homes. Wal-Mart plans to expand the price cuts to more than a million items by the end of June.
Wal-Mart is now launching an incubator lab focused on projects in robotics, virtual and augmented reality, and artificial intelligence in its battle with Amazon for customers The so-called Store No. 8 will be located in Silicon Valley.
Even as it goes after Amazon online, it's shoring up its advantage in stores.
Wal-Mart is honing its image at those locations and making customer service friendlier and faster. The company has invested $2.7 billion in higher wages and training for workers to decrease turnover and make the shopping experience more desirable.
Wal-Mart Stores Inc. reported fiscal first-quarter earnings of $3.04 billion.
On a per-share basis, the Bentonville, Arkansas, company had a profit of $1.
The results surpassed Wall Street expectations of 96 cents per share, according to a poll by Zacks Investment Research.
Revenue was $117.54 billion, just shy of the $117.63 billion analysts had expected.
Wal-Mart expects its per-share earnings to range from $1 to $1.08 for the current quarter. Analysts forecast adjusted earnings per share of $1.07.
Wal-Mart's revenue at stores opened at least a year rose 1.5 percent, at the top end of the company's estimated range of 1 percent to 1.5 percent.
That was fueled by customer traffic increase of 1.5 percent.
Shares rose slightly in pre-market trading Thursday.