Walmart’s bruising battle with Amazon saps its 4Q results

NEW YORK — Walmart is getting bruised in its battle with online leader Amazon.

The world’s largest retailer on Tuesday reported a smaller-than-expected fourth-quarter profit as it wrestled with slower e-commerce sales during the busiest time of the year. The results underscore the company’s challenges in a fiercely competitive retail landscape.

Its stock took a beating, falling 10.2 per cent to post its biggest single-day percentage drop in 30 years. Its decline was a big factor in a drop of 1 per cent by the Dow Jones industrial average.

The fourth-quarter profit numbers overshadowed the discounter’s better-than-expected sales at its established stores and higher customer traffic as online services linked to its stores attract more shoppers.

The company’s mixed results raise concerns its push to narrow the gap between itself and Amazon.com Inc. may be losing steam. This despite it making huge investments in both its digital business and its stores, where it has taken steps like lowering prices.

Walmart’s e-commerce sales growth in its U.S. business slowed to 23 per cent during the fourth quarter, a sharp decline from 50 per cent in the third quarter. It noted last year’s results got a big boost from its acquisition of online retailer Jet.com.

But it also acknowledged its own mistakes — a surge of TVs, toys and electronics into its warehouses during the peak periods of the holiday season crowded out more basic items. Still, Walmart finished the year with more than 40 per cent growth in online sales in the U.S., and it expects that online sales will be revived this year to hit that same pace.

Walmart and other retailers are looking at new ways to compete in light of swiftly changing shopping habits. Albertsons Cos., the owner of Safeway and other grocery brands, announced Tuesday it is buying the drugstore chain Rite Aid.

Walmart itself is building fewer big stores and focusing on investments in its online business while beefing up benefits for its workers.

Since buying Jet.com for more than $3 billion a year and a half ago, Walmart has added online services, acquired brands like Bonobos and ModCloth and vastly expanded the number of items available online. Walmart is also getting ready to launch an overhauled website with a focus on fashion and home furnishings. 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.

“We’re accelerating innovation in the business to make shopping faster and easier for our customers,” said Walmart CEO Doug McMillon,

But Walmart has a long way to get even close to Amazon’s online dominance. Amazon.com Inc. has leveraged its $99-a-year Prime membership program into intense loyalty from customers, and it’s recently stepped into Walmart’s turf, no longer content with only online sales. After spending $14 billion to acquire Whole Foods last summer, Amazon just announced two-hour delivery from the grocery chain for its members.

Walmart Inc., based in Bentonville, Arkansas, earned $2.17 billion, or 73 cents per share, in the three-month period ended Jan. 31. That compares with $3.76 billion, or $1.22 per share, in the year-earlier period.

Excluding charges, Walmart earned $1.33 per share. The results fell short of Wall Street expectations. Analysts surveyed by Zacks Investment Research were calling for earnings of $1.36 per share.

The world’s largest retailer posted revenue of $136.27 billion, exceeding the average analyst estimate of $135.04 billion.

Revenue at stores opened at least a year rose 2.6 per cent at its namesake U.S. stores. That marked the 14th consecutive quarter of increases. Customer counts rose 1.6 per cent.

At Walmart’s Sam’s Clubs, same-store sales rose 2.4 per cent in the fourth quarter. The company announced earlier this month that it was offering free shipping for premium members and simplifying its membership tiers.

Last month, Sam’s Club began closing 63 U.S. clubs while turning a dozen of them into warehouses for digital sales, with the goal of speeding up deliveries.

The company said Tuesday that its federal corporate tax rate for the current year will be between 24 and 26 per cent due to the new tax reform. Walmart’s previous tax rate was 32.5 per cent. Walmart’s Chief Financial Officer Brett Biggs said that it expects a cash benefit of $2 billion for the year.

Its shares ended Tuesday down $10.67 to $94.11, its biggest single-day drop in percentage terms since Jan. 8, 1988.

Just Posted

Rebels drop home opener to Oil Kings

The Edmonton Oil Kings were simply better than the Red Deer Rebels… Continue reading

RDC Kings topple Medicine Hat College Rattlers

Kings Matheus Alves scores twice in the win

Grassroots movement to clean up Red Deer is gaining momentum

Homeless people need more attention than shopping carts, says former councillor Cindy Jefferies

Improving life for people with Alzheimer’s and their families is a priority for Raitt

The federal Conservatives deputy leader is dealing with the disease in her own home

PHOTO: International Peace Day

Visitors broke bread, made crafts and trading cards at a gathering marking… Continue reading

RDC Kings topple Medicine Hat College Rattlers

Kings Matheus Alves scores twice in the win

Saskatchewan RCMP charge man in abduction that sparked Amber Alert last Sunday

NORTH BATTLEFORD, Sask. — Saskatchewan RCMP have arrested a man following an… Continue reading

One dead following police-involved shooting in Burlington, Ont.

BURLINGTON, Ont. — Ontario’s police watchdog says a 32-year-old man was shot… Continue reading

Several injured as Tornado tears through Ottawa and Gatineau, Que.

OTTAWA — A tornado ripped through the Ottawa area Friday afternoon, damaging… Continue reading

B.C. wildfires burned large areas affected by mountain pine beetles: Experts

VANCOUVER — Clearing or burning beetle ravaged forests may be costly but… Continue reading

Dustin Byfuglien scores in overtime, Jets beat Flames 4-3 in pre-season

WINNIPEG — Bryan Little tied the game late in the third and… Continue reading

Mistrial denied in Calgary murder trial over jury’s visit to hotel Denny’s

CALGARY — A Calgary judge has denied a request for a mistrial… Continue reading

Former Canadian astronaut says space shuttle is a vehicle of hope

OTTAWA — Sending messages of hope from space is a big part… Continue reading

Canada requests trade panel on uncoated groundwood paper ruling by U.S.

OTTAWA — Canada has requested a NAFTA trade panel review a U.S.… Continue reading

Most Read