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Walmart
,
America’s largest retailer, is barreling into the holidays with an ever-expanding e-commerce business. On Thursday it reported online sales growth for the latest quarter of 43%, setting it up to overtake Apple as the third-largest U.S. e-commerce retailer in 2018, according to a report by eMarketer. It is expected to account for 4% of total U.S. e-commerce sales, or $20.9 billion, putting it behind only Amazon and
eBay
.
Admittedly, Amazon still has an outrageous lead, but investors concerned about Walmart’s expensive investments should be pleased to see that they are paying off.
The company reported earnings of $1.08 per share for the third quarter, beating expectations, and revenue of $124.89 billion, falling slightly short. Yet comparable-store sales were up 3.4%, leading Walmart to raise its forecast for the year. Comparable-store sales this year should be the best in nearly a decade.
The company is gaining online market share in groceries and apparel. It is also selling 40% more toys this fall than it did last year, benefiting from the collapse of Toys “R” Us. That bodes for a very happy holiday season.
Walmart has expanded its online footprint by acquiring digital brands such as Bare Necessities and Eloquii and scaling up its grocery business. Consumers, who have been ordering online and picking up in-store, will soon have the option of getting groceries delivered directly to their home. The company plans to have home-delivery available from 800 stores by the end of the year.
That should allow Walmart to improve margins in its e-commerce business, said Chief Executive Doug McMillon. The company now expects comparable-stores sales growth this year to reach at least 3% in the U.S. It has also raised its earnings outlook for this fiscal year to $4.75 to $4.85 per share from $4.65 o $4.80.
The stock sold off on the slight sales miss, though it was currency-related. Year-to-date the shares are barely changed, having recovered from a dim view that investors took of the acquisition of Indian e-commerce retailer Flipkart in a $16 billion deal and from a scare about its slowing e-commerce sales back in February.
It is time to consider putting Walmart back in the shopping cart.
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