Walmart’s Q1 Ecommerce Sales Rebound

While Walmart Inc.’s total revenue and U.S. comparable-store sales and comp traffic all grew in the first quarter of its fiscal 2019, the biggest result was the mega-retailer’s surge in ecommerce sales, which contributed about 100 basis points to Walmart U.S. comps growth, with strength in home delivery and online grocery, for an impressive 33 percent spike. By the end of the quarter, online grocery was offered at nearly 1,400 locations.

The ecommerce sales recovery followed comparatively sluggish growth in that area in the fourth quarter of fiscal 2018, which the company blamed on restructuring after its Jet acquisition and in preparation for the holidays, as well as certain unforeseen operational issues.

Walmart’s total revenue was $122.7 billion, an increase of $5.1 billion, or 4.4 percent (excluding currency, total revenue came to $120.7 billion, a rise of $3.2 billion, or 2.7 percent). U.S. comparable-store sales grew 2.1 percent, and comp traffic edged up 0.8 percent.

“We delivered a solid first quarter, and we’re encouraged by the continued momentum across the business,” noted Walmart President and CEO Doug McMillon. “We’re transforming to better serve customers. We are changing from within to be faster and more digital, while shaping our portfolio of businesses for the future. Our strong cash flow and balance sheet provide flexibility to do so.”

On a two-year stacked basis, Walmart U.S. comps and traffic rose 3.5 percent and 2.3 percent, respectively. For the first quarter of 2019, food categories continued to perform well in the segment, with comps and traffic growth across categories, although unseasonably cool April weather somewhat dampened general merchandise sales and traffic. Meanwhile, GAAP EPS fell 28 percent and adjusted EPS rose 14 percent.

Further, the gross margin rate declined 23 basis points, which the company attributed mainly price investments, in addition to higher transportation expense caused mostly by rising fuel costs and third-party trucking market rate pressures.

Among Walmart’s other divisions, Sam’s Club comps rose 3.8 percent, led by comp traffic growth of 5.6 percent, although tobacco sales negatively affected comp sales by about 140 basis points. Meanwhile, Walmart International’s net sales totaled $30.3 billion, an 11.7 percent rise (excluding currency, net sales were $28.3 billion, a 4.5 percent increase), and eight of 11 markets posted reported positive comps, including the company’s four biggest markets.

The company’s major business moves in the first quarter of its fiscal 2019 include becoming the largest shareholder in Indian ecommerce company Flipkart and selling its U.K.-based Asda subsidiary to Sainsbury’s.

Walmart operates more than 11,700 stores under 65 banners in 28 countries, as well as ecommerce websites, employing about 2.3 million associates worldwide.