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E-commerce growth boosts Walmart 4Q19 results

20 February 2019

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by Anchor

Walmart Inc. reported better-than-expected 4Q19 results on Tuesday (19 February), with revenue climbing c. 2% YoY to $138.79bn from $136.27bn in 4Q18 and adjusted EPS rising by 6.0% YoY to $1.41. Both revenue and EPS came in above the Refinitiv consensus estimates of $138.65bn in revenue and $1.33/share in earnings, respectively.

A highlight in these results was e-commerce sales jumping by an impressive 43% YoY in the US holiday quarter, as more shoppers chose to use Walmart’s online grocery delivery service and spent more per trip. The firm’s successful grocery pickup and delivery is now available in more than 2,100 locations and c. 800 stores, respectively, and by the end of FY20, Walmart expects to include grocery pickup at 3,100 locations and delivery in 1,600 stores. Walmart’s focus on revamping its e-commerce experience by adding new technologies and updating its website also buoyed e-commerce sales. For the year as a whole (FY19), Walmart achieved e-commerce sales growth of 40% – in line with its target.

US same-store sales (Walmart stores operating for at least 12 months) rose 4.2% YoY – above expected growth of 3.2% YoY. The company said traffic at stores was up just 0.9% during the quarter vs growth of 1.6% in the same period a year ago, however, the average shopper’s ticket increased by 3.3% YoY.

Walmart raised its annual dividend by 2% YoY to $2.12/ share, up from $2.08/ share.

Looking ahead, the retailer maintained its sales outlook for FY20 saying that net sales growth is predicted to be at least 3% YoY and will be negatively impacted by the deconsolidation of Walmart’s Brazil operations and reduced tobacco sales at Sam’s Club. Nevertheless, itstill expects net sales to climb c. 5% YoY internationally and US same-store sales to rise by 2.5%-3.0% YoY. The company is targeting e-commerce sales growth of 35% for FY20 – below its FY19 achievement.

Walmart also indicated that it will spend the most money on “store remodeling, e-commerce initiatives and bulking up its supply chain in 2019.”

As of Tuesday’s (19 February) close, Walmart shares are up c. 10% YTD. The share is trading at a 31.8x PE.

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