A rare miss for Walmart to end the year
Walmart reported disappointing fourth-quarter profits and sales after a sluggish and shortened holiday shopping season.
Violent social protests in Chile, where there are hundreds of Walmart stores, cut into international sales.
Walmart also delivered a weak profit forecast for the year and a rare quarterly miss, Walmart's worst in about five years.
" We started and finished the quarter with momentum, while sales leading up to Christmas in our U.S. stores were a little softer than expected," said CEO Doug McMillon.
Walmart is the first major retailer to report fiscal fourth-quarter results and the numbers underscore a multitude of challenges that retailers faced this holiday season.
It was the shortest holiday shopping season since 2013, leaving retailers to figure out how to get people thinking about the holidays sooner. The ongoing trade war with China has raised costs for most and now, a new virus in China is hitting a huge customer base as well as manufacturing facilities and supply chains.
The challenges come on the back of hundreds of bankruptcies as retailers attempt to satisfy a customer that has gone increasingly online one that demands speedy delivery and speedy returns.
Walmart, which operates more than 400 stores in China, didn't include the potential impact of coronavirus in its forecast citing the uncertainty of how it will play out over the next year. But executives believe the disruption is likely shaving a few pennies per share in the current quarter.
Walmart and Target have stood out among retailers, having ramped up deliveries and other conveniences for customers, but Target also struggled during the holiday due to weak sales of toys and electronics.
Walmart continued to produce strong results from its grocery aisles, helped by expanded online delivery. It now has 3,200 locations for grocery pickup and 1,600 locations that offer grocery delivery. Last fall, it launched "Delivery Unlimited," which costs $98 annually and $12.95 monthly for unlimited grocery delivery. It also launched a delivery service in three cities, giving customers the option to let its own delivery person put purchases directly into the refrigerator when they're not home.
Walmart's same-store sales of 1.9% this quarter were well below the 3.2% increase in the previous period. It was, however, the 22nd consecutive quarter of same-store sales gains.
Online sales in the U.S. rose 35%, weaker than the 41% increase booked in the previous quarter. For the year, U.S. online sales rose 37%. For the current fiscal year, the company's online sales should be up 30%, to $50 billion. Walmart said that losses in its U.S. e-commerce division will either level off or decline for the current year.
Quarterly net income was $4.14 billion, or $1.45 per share, in the quarter ended Jan. 31. That compares with $3.69 billion, or $1.27 per share, in the same period a year ago. Adjusted earnings per share were $1.38. Analysts were expecting $1.44 per share, according to FactSet.
Revenue rose 2.1% to $140.6 billion, shy of the $141.5 billion Wall Street was looking for.
Walmart said three-quarters of its nearly 400 stores in Chile were badly damaged during violent anti-government protests that began in October. Demonstrations began after an increase in the subway fare, but have grown to encompass grievances about pensions, education, health care and other issues.
Walmart does not expect the situation in Chile to normalize this year.
Separately, Walmart approved an annual cash dividend for the fiscal year 2021 of $2.16 per share, an increase from the $2.12 per share paid for the last fiscal year. The fiscal year 2021 annual dividend of $2.16 per share will be paid in four quarterly installments of $0.54 per share,
Walmart expects annual per-share earnings of between $5 and $5.15, short of the $5.21 that industry analysts had projected, and Walmart said Tuesday that its outlook does not include potential damage from the viral outbreak in China, where the company has significant operations.
Shares rose 45 cents to $117.89 Tuesday.