Walmart posted lackluster revenue totals during the holiday season as the retail giant saw underwhelming sales in major categories, including toys and apparel. Total Q4 revenue grew 2.1% to $141.67 billion, versus the $142.55 billion expected by Wall Street analysts, and adjusted earnings per share were $1.38 versus the $1.44 expected. Net income was $4.14 billion, up 12% from a year ago.
Q4 U.S. same-store sales increased 1.9%, missing expectations of 3% growth. During the same period last year, Walmart saw 4.2% growth. The holiday quarter represented the lowest same-store sales growth total since the retail giant posted a 1.8% increase in Q2 2018.
“The holiday season delivered positive transaction growth and underlying expense leverage was strong for the quarter,” said Walmart CFO Brett Biggs in a statement. “However, it wasn’t as good as expected due to lower sales volumes and some pressure related to associate scheduling. We understand the factors that affected our results and are developing plans to address them.”
Walmart’s lackluster holiday isn’t unique ― Target’s November and December same-store sales only grew 1.4%, falling far short of the 3% to 4% gain it had predicted before the season.
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Biggs pointed out that Walmart “experienced some softness” in categories including toys, video games and clothing, all sectors that typically see a major spike during the holiday season.
Online grocery continues to be a success story for Walmart, which now has 3,200 locations for grocery pickup and 1,600 locations that offer grocery delivery. With groceries generating 56% of Walmart’s U.S. sales, the retailer will continue to rely on growth in this category if apparel and other areas continue to falter. Last fall, Walmart launched “Delivery Unlimited,” which costs $98 annually and $12.95 monthly for unlimited grocery delivery. The retailer also launched an “InHome” delivery service in three cities, giving customers the option of allowing its own delivery person to put purchases directly into the refrigerator when they’re not home.
Despite 35% e-Commerce growth in Q4, questions remain about Walmart’s ability to keep up with online investments. After going on a digitally native acquisition spree over the past four years to boost its e-Commerce capabilities, Walmart’s overall online operation remains unprofitable, reportedly creating internal dissension regarding the future of the business.
Walmart has responded selling off ModCloth, laying off hundreds of Bonobos employees (alongside the exit of Founder and former CEO Andy Dunn in January), folding Jet.com operations into Walmart.com and most recently shuttering its NYC-based Jet black shopping service.
For the full year (referred to as fiscal 2020), Walmart’s revenues rose 1.9% to $524 billion, while U.S. same-store sales jumped 2.8%, e-Commerce sales grew 37% and Sam’s Club same-store sales rose 0.7%.
The company expects e-Commerce losses to come in flat or to slightly improve during fiscal 2021 after several years of increasing losses. Like Amazon, Walmart will seek to expand the number of third-party merchants that pay fees to sell through its web site.
For the entire business, Walmart lowered fiscal guidance earnings expectations to between $5 and $5.15 per share, below Wall Street’s expectations of $5.22.
