Best quarterly US sales growth for Walmart

NEW YORK • Walmart posted its best quarterly United States sales growth in a decade and upped full-year sales and profit outlooks on Thursday, sending shares surging as a jump in online and grocery purchases showed it can hold its own against Amazon.com.

The world's largest retailer is known for its sprawling stores, a factor that could have worked against it as shoppers migrate online. But Walmart is also the top American grocer, providing a draw for customers to visit stores, where they may also make other impulse buys.

Walmart has also overhauled its website and worked to use physical locations as distribution points for online orders of groceries and other goods, helping retain buyers who increasingly expect quick, cheap shipping. Consumers spent more on categories like grocery, apparel and seasonal merchandise in the second quarter, helping sales rebound after a slow start in April.

Walmart has recorded four straight years of US growth, unmatched by any other retailer.

"We saw strong performance in fresh food," US chief executive Greg Foran said on an earnings conference call, praising sales in produce, meat and bakery. Grocery sales rose the most in nine years.

Walmart benefited from improved weather in May, the first month of the quarter, seeing the biggest quarterly gain in customer traffic in more than six years, chief financial officer Brett Biggs told Reuters.

Rising wages, lower unemployment and tax cuts that have put more money in US consumers' pockets this year also helped.

Walmart's US e-commerce growth ticked higher than previous quarters, driven by a website redesign and continued expansion of online grocery offerings.

Sales growth has come at some cost, however, with the company citing continued margin pressures driven by cutting prices, higher freight costs due to a shortage of truck drivers and e-commerce investments.

Walmart's shares ended up 9.3 per cent at US$98.64 on Thursday. The company's stock had fallen around 9 per cent since the start of the year.

Walmart raised its sales and earnings outlook for the full year, excluding any impact from its acquisition of Indian e-commerce company Flipkart, which it is still in the process of closing.

E-commerce sales grew 40 per cent in the quarter, up from 33 per cent growth in the previous period, and the retailer said US online sales are on track to rise 40 per cent for the full year.

Walmart now offers curbside pick-up of online grocery orders in 1,800 US stores and the service is bringing in new customers, Mr Biggs said.

REUTERS

A version of this article appeared in the print edition of The Straits Times on August 18, 2018, with the headline 'Best quarterly US sales growth for Walmart'. Print Edition | Subscribe