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(Reuters) – Walmart Inc. said Tuesday did not perceive any signs of weakness in consumer spending in the United States. It has recorded the strongest sales growth of the holiday quarter of this decade, citing the strength of sales in the grocery and e-commerce sectors and easing fears of an impending recession in the United States .
Shares of the world's largest retailer have risen nearly 4% Tuesday and 7% since the beginning of the year.
Walmart's performance and strong growth in vacation sales by its competitor Target Corp reflected the health of the US consumer, while spending remained robust due to a strong labor market and lower fuel prices.
"We are always very satisfied with the consumer. We have not seen much change, "said Brett Biggs, chief financial officer of Walmart. "The data we see is still pretty healthy. Gas prices are falling year by year, which helps. "
Walmart's performance helped address some concerns about an impending slowdown in US spending this year, but investors urged caution.
Charles Sizemore, founder of Sizemore Capital Management LLC, which owns Walmart shares, said the current retail sales data looks promising, but the overall picture remains mixed.
"There are certainly thunderstorms on the horizon," Sizemore said. "A great example would be the overdue loans in the auto sector that are rising … the consumer may be in a difficult period and in 2008, it was the prelude to the global economic downturn."
US retail sales recorded their largest decline in more than nine years in December, the government announced last week, as revenues fell overall, suggesting a sharp slowdown in economic activity in the United States. the end of 2018.
According to a Mastercard report published at the end of December, total sales for the 2018 holiday season in the United States reached their highest level in six years, with buyers being encouraged by the anticipated reductions.
Walmart sales in US stores opened at least one year increased 4.2%, excluding fuel, in the fourth quarter ended January 31. The gain exceeded analysts' expectations by 2.96%, according to Refinitiv's IBES data.
Sales also increased after the federal government's distribution of food stamps at the beginning of the partial government shutdown. The disappearance of retailer Toys R Us has helped Walmart gain market share in toys, the company said.
Adjusted earnings per share increased to $ 1.41 per share, exceeding expectations of $ 1.33 per share, according to Refinitiv's IBES data. However, gross margins for retailers decreased for the seventh consecutive quarter due to higher transportation costs and investments in e-commerce.
ONLINE SALES SAFE
Online sales jumped 43% in the quarter, in line with the previous quarter's increase, as Walmart's online grocery store pickup and delivery services expanded and a wider assortment was added. website.
However, the company reiterated that it expected an increase in e-commerce losses this year due to ongoing investments. Chief Executive Officer Doug McMillon said during a conference call that the company was focused on getting new customer visits and strengthening the product line.
The company has developed a program that allows customers to order groceries online and pick them up at its stores in the United States, which the retailer believes has increased market share in this market. category. He said that he will have service in 3,100 stores by next January. By the end of the fourth quarter, it was available in more than 2,100 stores.
Walmart will offer grocery deliveries to approximately 800 other stores by the end of the year, bringing the total to 1,600 stores.
Grocery sales currently account for 56% of the retailer's total revenues. Amazon.com Inc is trying to break the food category, especially since it has bought the Whole Foods organic supermarket chain.
Walmart works in partnership with third-party email services and collaborates with so-called studio or freelance drivers, who cost less than full-time employees, to reduce costs, Reuters recently reported.
Deliv, a delivery partner of Walmart in Miami and San Jose, has ended its relationship with the retailer, announced Reuters last week.
The US distributor, which overtook Apple Inc. to become the third largest e-commerce retailer last year, is expected to capture a 4.6% share of the US e-commerce market, behind eBay Inc. and Amazon, according to the eMarketer research firm.
Walmart reiterated its expectation that fiscal year 2020 earnings per share would decline as a percentage, compared to the previous year. With the exception of the acquisition of the Indian company e-commerce Flipkart, the group observes an increase in low to medium values.
McMillon said the company was disappointed by the revised Indian e-commerce regulation, which prohibits companies from selling products through companies in which they have a stake, and also prohibits them from contracting with sellers. to sell exclusively on their platforms.
He added that the Indian government had not consulted Walmart or other US companies before changing the rules. "We hope for a collaborative regulatory process in the future, which will help to balance the rules of the game," he said.
Walmart expects comparable sales growth of 2.5% to 3% for the 2020 fiscal year, excluding fuel and online sales growth of 35%.
Total revenue rose 1.9% to $ 138.8 billion, exceeding analyst estimates of $ 138.65 billion. Walmart experienced 18-quarter comparable US sales growth, more than four years in a row, unparalleled by any other retailer.
The stock rose 3.7% to $ 103.68. Target and Costco Wholesale Corp both grew by more than 1%.
Report by Nandita Bose in Washington; Edited by Jeffrey Benkoe
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