An employee wearing a protective mask arranges shopping carts outside a Walmart store in Duarte, California, USA on Thursday, November 12, 2020.
David Swanson | Bloomberg | Getty Images
Walmart’s fourth-quarter earnings fell short of Wall Street’s expectations on Thursday as the retailer strives to turn the strength of its e-commerce operations during the pandemic into lasting momentum and higher profits.
The shares are down more than 4% in premarket trading.
The US discounter’s e-commerce sales grew 69% – a large number, but the lowest growth rate since the onset of the global health crisis. Same-store sales in the US grew 8.6%, ahead of the 5.8% increase expected by a StreetAccount survey. Its subsidiary, Sam’s Club, also reported low-single-digit sales growth in the same store, excluding fuel and tobacco.
However, Walmart warned it expects sales to moderate this year. It said earnings per share will decline slightly, but will be flat to higher after excluding divestments. The company’s tailwind from pandemic trends could also fade, as more Americans get Covid-19 vaccines and spend their budgets in other ways, such as eating out or filling up the gas on the way to the office.
Doug McMillon, CEO of Walmart, said the company has stepped up its investments to keep up with the significant ways retail has changed over the past year. He said it will also increase the wages of American workers, pushing the average for hourly workers to above $ 15 an hour.
“This is a time to be even more aggressive because of the opportunity we see before us,” he said in a press release. “The strategy, the team and the capabilities are there. We have momentum with customers and our financial position is strong.”
Walmart made a loss of $ 2.09 billion, or 74 cents a share, a year earlier from profits of $ 4.14 billion, or $ 1.45 share. The company said a loss on its UK and Japanese operations reduced earnings by $ 2.66 per share, which was partially offset by a 49 cent per share gain on equity investments.
Excluding these and other items, Walmart earned $ 1.39 per share, with analyst estimates missing.
Total sales grew 7.3% to $ 152.1 billion from $ 141.67 billion a year earlier, topping Wall Street’s expectations of $ 148.30 billion.
The member warehouse club, Sam’s Club, reported that sales at the same store grew 8.5%, excluding fuel and tobacco. The e-commerce turnover of the member warehouse club increased by 42%.
Walmart increases its dividend and approved $ 20 billion share buyback program.
This story is under development and will be updated.
Read the full press release here.