Walmart has been used to generating enormous e-Commerce growth rates since purchasing Jet.com in August 2016, but the 2017 holiday season saw some cooldown. While Walmart had 60% and 50% online growth in Q2 and Q3, respectively, the retailer saw e-Commerce sales increase only 23% in Q4 2018.
Walmart’s total Q4 revenue was $136.3 billion, an increase of $5.3 billion or 4.1% over Q4 2017, while U.S. comparable-store sales increased 2.6%, marking the 14th straight quarter same-store sales remained positive. Shopper visits rose 1.6%, indicating that Walmart’s efforts to integrate physical stores and e-Commerce are paying off. Gross margins fell 60 basis points to 24.1%.
Walmart stock dipped 9% in the wake of the news, but Moody’s Lead Retail Analyst Charlie O’Shea still saw the online sales growth as “impressive,” in commentary provided to Retail TouchPoints. O’Shea attributed the lower gross margin to holiday promotional activity, as well as the impact of an “ongoing price-driven market share battle with Amazon.”
Doug McMillon, CEO of Walmart, indicated in an earnings call that the “majority of this slowdown was expected.” But McMillon noted that e-Commerce sales were depressed due to some operational issues.
“During the seasonal spikes, seasonal inventory — think electronics, toys, gifts — came into our fulfillment centers and there was enough cube that it harmed our basic in-stock on more everyday items, and our basic in-stock for e-Commerce suffered as a result,” McMillon said during the call. “So we’re learning how to deal with higher volumes and learning how to deal with a higher peak than what we had previously.”
For the full fiscal year, Walmart brought in revenues of $500.3 billion, a 3% year-over-year increase, and e-Commerce sales grew 44% to $11.5 billion. McMillon said in a statement that Walmart is still maintaining an expectation of 40% e-Commerce growth in calendar 2018.
Separately, Walmart is revamping its store-brand labels in low-price apparel, according to Bloomberg News. The new clothing lines will include Time and Tru for women, Terra & Sky for plus sizes and Wonder Nation for kids, and Faded Glory, White Stag and Just My Size will be phased out.
The apparel changes come as Walmart plans to unveil a new web site in early 2018. Lord & Taylor will launch a flagship store on the updated Walmart.com in spring 2018, as part of the retail giant’s push to serve as a more upscale online destination for fashion and apparel.