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Why Walmart Stock Fell More than 10% in Fiscal 4Q18

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Nov. 20 2020, Updated 11:32 a.m. ET

Slow online sales

Walmart (WMT) reported mixed fiscal 4Q18[1. fiscal 4Q18 ended on January 31, 2018] results on February 20, 2018. After its results were released, the company’s stock fell more than 10.0%.

Investors were concerned about its online sales growth rate, which was less than half of what it achieved in fiscal 3Q18. Notably, e-commerce is the key catalyst behind Walmart’s turnaround.

The markets may have overreacted, as the decline in its digital sales growth rate was expected. It’s been more than a year since Walmart acquired Jet, and the growth rate has slowed down. So, a decrease in its sales growth rate was expected. In the next part of this series, we’ll discuss Walmart’s e-commerce sales and its effect on its stock price.

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Walmart’s slow growth took a toll on other retailers

The chart above shows that the stock prices of other major food retailers also tumbled following Walmart’s soft performance during the holiday period. Investors are wary of the fact that a price war among retailers is here to stay. Retailers are pushing hard to gain market share, which is expected to hurt the margins of these companies.

Stock prices of Kroger (KR), Costco (COST), and Target (TGT) registered declines of 4.2%, 1.8%, and 3.8%, respectively, on February 20, 2018.

Walmart’s (WMT) massive stock decline also weighed on ETFs that have significant holdings in Walmart. The Consumer Staples Select Sector SPDR ETF (XLP), which has ~8.4% of its holdings in Walmart stock, recorded a decline of 2.3% on February 20. The First Trust NASDAQ Retail ETF (FTXD), which has ~8.0% of its holdings in WMT, registered a decline of 2.5%.

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