Walmart e-commerce growth slows in fourth quarter, but sales beat estimates

Walmart Inc beat Wall Street expectations for quarterly earnings even as e-commerce growth slowed and the retailer grappled with its logistics network during the holiday shopping season.

The company increased e-commerce sales 42% in the quarter, compared with last year’s 65% growth.

It gained more share than Amazon.com Inc in two major US online categories, toys and electronics, said Neil Saunders, managing director of GlobalData Retail. “This result is particularly impressive given Amazon’s scale advantage and the pressure from falling prices and increasing promotions.”

Walmart shares rose more than 5% after the opening bell on Friday.

The world’s largest retailer is investing heavily in online grocery delivery, which it is expanding to almost 2,000 stores by the end of the year.

Fourth-quarter sales at US stores open at least a year rose 1.5%, in line with Walmart’s own projections.

Online grocery orders jumped to 830,000 from 480,000 over the holiday period, it said.

Chief Executive Doug McMillon said the retailer was confident in its future course.

The company is implementing a small-format store strategy to stem the losses from its many large stores that are already under pressure from surging competition.

Incentives to shift to small stores from larger Walmart stores will cost Walmart about $300m to $400m in this year, and $500m to $600m next year, the company said.

Walmart has said it expects US comparable store sales to increase by 1-2% for the full year, from a prior forecast of 1.5-2.5%.

Profits came in stronger than expected, thanks to cost controls and lower tax rates. It expects 2018 earnings of $4.85-$5.15 per share, compared with $4.94 a year earlier.

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