Despite every retailer attempting to boost their online presence, it turns out that profitability for online sales is lower, and dependability may be too. Walmart recently suffered a bad quarter of earnings, in large part because of mismanaged online sales. In the fourth quarter sales grew 23%, down from over 50% in each of the previous three quarters. Investors weren’t happy with the slow down. Sarah Nassauer reports:
That wasn’t enough for investors. “This quarter did not live up to those high expectations,” said Simeon Gutman, a retail analyst for Morgan Stanley.
Still, Mr. McMillon on Tuesday expressed confidence. “Looking ahead, we expect e-commerce growth to increase from the fourth-quarter level as we enter the new year,” he told analysts.
E-commerce accounts for less than 4% of Walmart’s over-$500 billion in annual revenue. Walmart expects online sales to grow 40% for the current fiscal year, which ends next Jan. 31.
Walmart has been working quickly to build its e-commerce business in recent years and head off Amazon.com’s dominance online. It has shifted spending to invest in its web operations, including faster home delivery and e-commerce acquisitions. It also has spent to improve existing stores, while it cut jobs and tightened expense controls.
The company closed 10% of U.S. Sam’s Club locations earlier this year and has slowed Walmart store openings to focus on e-commerce growth.
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