Walmart reaps digital dividends

by Jeff Gelski
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Wal-Mart grocery pickup station - online ordering
More Wal-Mart customers are ordering groceries online and picking them up in Wal-Mart parking lots.

BENTONVILLE, Ark. – Digital activity, even when the sun goes down, is rising for Wal-Mart Stores, Inc. People ordered more groceries on-line in the fiscal year ended Jan. 31, but deflation in meat and poultry had a negative impact on financial results for food.

Globally, overall e-commerce sales on a constant currency basis increased about 12 percent to $13.7 billion in the fiscal year. Walmart expanded on-line grocery shopping to more than 150 locations across more than 20 US markets, said Doug McMillon, president and chief executive officer of Bentonville-based Walmart, in a Feb. 18 earnings call.

 

Doug McMillon, Walmart
Doug McMillion, president and CEO of Wal-Mart

“Customers are ordering online and on their phones and then picking up their groceries on our parking lots without ever leaving their cars,” he said. “Customer satisfaction for those who use our free pickup service is in the high 90s.

“We are learning some interesting things along the way. We have found that 8 p.m. to 9 p.m. is one of the most popular times customers order groceries online, usually once the kids go to bed. We also see a healthy number of orders in the middle of the night. These may be parents comforting or feeding infants and ordering more diapers or formula to pick up the next day.”

Walmart faced significant headwinds from deflation in meat and dairy products, which resulted in slight deflation across the entire food category, said Greg Foran, president and CEO of Wal-Mart US. Food deflation has accelerated over the past six weeks and will remain a challenge, he said.

Comparable store sales in grocery were up low single-digit for Wal-Mart US. For Sam’s Club, comparable store sales were down low single-digit in both fresh/freezer/cooler and grocery and beverage.

Sam's Club store
For Sam’s Club, comparable store sales were down low single-digit in both fresh/freezer/cooler and grocery and beverage.

“Sam’s Club is in the early days with its new strategy,” McMillon said. “Comps for the (fourth) quarter were below what we anticipated, and food in particular underperformed outside of the holiday periods. We are pleased with the work so far to address the fundamentals of the business to improve merchandising and drive new membership, but we have more to do.”

Companywide, net income from contributing operations attributable to Walmart was $14.69 billion, or $4.58 per share on the common stock, in the fiscal year, which was a 9 percent decline from $16.18 billion, or $5.01 per share, in the previous fiscal year. Total revenues of $482.13 billion were down 0.7 percent from $485.65 billion in the previous fiscal year.

In the fourth quarter, net income from contributing operations attributable to Walmart was $4.574 billion, or $1.44 per share, which was down 8 percent from $4.97 billion, or $1.54 per share, in the same time period of the previous year. Fourth-quarter total revenues slipped 1.4 percent to $129.67 billion from $131.57 billion.

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