Sales growth rate slows down
Walmart (WMT) disappointed investors with its fiscal 4Q18[1. fiscal 4Q18 ended January 31, 2018] e-commerce sales growth rate. The company’s digital sales growth rate receded on a quarter-over-quarter basis.
During fiscal 4Q18, Walmart’s e-commerce sales in the US marked a YoY (year-over-year) increase of 23.0%, a much slower rate when compared to the previous three quarters of fiscal 2018.
Walmart’s e-commerce business reported YoY growth of 63.0%, 60.0%, and 50.0% in fiscal 1Q18, fiscal 2Q18, and fiscal 3Q18, respectively.
However, Walmart met its full-year guidance and recorded e-commerce sales of $11.5 billion in fiscal 2018, up 44.0% on a YoY basis.
As we noted earlier in this series, Walmart’s digital sales growth rate was expected to decelerate as it’s been more than a year since the company’s Jet.com acquisition. However, the rate of decline is significant on a sequential basis, as operational issues hindered the company’s e-commerce sales during the holiday period.
Walmart (WMT) expects that its e-commerce business could generate about 40.0% growth in fiscal 2019. The company’s consumer-friendly initiatives include two-day free delivery of orders exceeding $35, the expansion of online grocery pickup services, pickup towers, discounts, and a simple return policy. These initiatives are expected to boost its digital sales.
Walmart is testing several same-day delivery options with the acquisition of Parcel, which could boost its online sales growth rate. However, rival Target (TGT) is also testing faster delivery options to better compete with Walmart and Amazon (AMZN).
Alongside fast delivery and ease of shopping, Walmart is focusing on merchandising through the acquisition of fast-growing brands. These brands include ModCloth and Bonobos, and its agreement with upscale fashion brand Lord & Taylor could drive its top line higher.
Walmart is reported to be eyeing a significant stake in India’s e-commerce leader, Flipkart.com. If the deal is completed, it could boost Walmart’s digital business by providing a strong avenue for growth while solidifying its competitive positioning against Amazon.com.
Continue to the next part where we’ll discuss Walmart’s fiscal 4Q18 sales performance.