Walmart, Big Retail Chains Ride US Economy as They Battle Amazon - http://earlyretireonline.com | how to earn money fastMay 17, 2018 3:14 pm
Categorised in: Breaking Financial News
Buoyed by low unemployment and rising wages, Americans are buying everything from apparel to groceries to dishwashers. Many of the chains, stung by competition from Amazon.com Inc., AMZN 0.15% have closed hundreds of weaker stores, leaving them with less inventory and better locations.
Executives at several chains that reported their latest results this week also said they haven’t yet seen much of a boost from the U.S. tax overhaul that should leave households with more spending money this year.
Walmart, the world’s biggest retailer, said Thursday that sales rose both online and in stores, driven by higher grocery sales and lower web prices. The results eased some fears earlier this year that growth on the e-commerce side of its business was slowing.
The economy is strong overall, but some shoppers are feeling the pinch from rising gas prices, said Walmart Chief Financial Officer Brett Biggs in an interview. “What we are seeing in the stores feels like what it’s felt like over the last 24 to 48 months,” he said.
The Commerce Department said Tuesday that April retail sales—a measure of spending at stores, shopping websites and restaurants—rose a seasonally adjusted 0.3% from the prior month. The April increase followed a stronger-than-expected month of spending growth in March, a relief for analysts who had worried about a late-winter slowdown in consumer spending.
Walmart reported that U.S. same-store sales rose 2.1% in the latest quarter. Walmart said e-commerce sales rose 33% from a year ago, up from 23% growth last quarter. E-commerce still accounts for a sliver of the company’s business, but it is the fastest growing part.
Grocery sales were strong, although other product sales were somewhat sluggish due to “unseasonably cool weather in April,” Walmart said. That has since reversed, said executives.
Penney and Home Depot Inc., which reported earlier this week, also cited cool weather for sluggish April sales. Home Depot’s same-store sales still rose 4.2%, driven by home-improvement projects.
Shares of Penney tumbled 11% in Thursday morning trading, while Walmart shares slipped 1.5% and Macy’s gained 3%.
On Wednesday, Macy’s said sales, excluding newly opened or closed locations, rose 3.9% during the quarter, a sign that the department-store giant is pulling out of a prolonged slump. “The customer is feeling confident, and is out there ready to spend,” Macy’s CEO Jeff Gennette said Wednesday.
He added that tax cuts are benefitting both consumers and companies. “We’ve been able to go faster with our initiatives based on the corporate tax cut,” he said.
Penney struggled from continued weakness in its women’s and children’s apparel offerings and supply-chain problems that forced it to liquidate some holiday goods. But it said it continued to pick up share in appliances as Sears Holdings Corp. closed stores.
Walmart, which is the largest seller of groceries in the U.S. and earns around 56% of its $318.5 billion in annual U.S. sales from food, is trying to capture online grocery sales as well as Amazon moves rapidly to grow in the category.
On Thursday Walmart said it will offer home grocery delivery from 800 stores by year’s end, adding to around 2,100 stores that let shoppers buy groceries online and pick up those orders in store parking lots.
At the same time, Walmart continues to eat into profits with investments to improve stores and grow online in the U.S. and internationally. In the first quarter, Walmart posted a profit of $2.13 billion, down from $3.04 billion last year.
This month Walmart agreed to take control of India’s largest e-commerce company, Flipkart Group, for $16 billion, betting that growth in the South Asian market will make up for the short-term losses from taking on the unprofitable startup.
Walmart reiterated Thursday that the Flipkart investment will reduce full-year per-share earnings by 25 cents to 30 cents, executives said last week. That will jump to 60 cents a share in the next fiscal year to keep Flipkart sales growing, said the company. The company previously said full-year per-share earnings would hit between $4.75 and $5.00.