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What Drove Walmart’s Q4 2019 Sales?

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Sales beat estimate

Walmart (WMT) reported better-than-expected sales in the fourth quarter of fiscal 2019. Its total revenue of $138.8 billion came in ahead of analysts’ estimate and increased 1.9% on a YoY (year-over-year) basis. A continued improvement in its comps driven by growth in its traffic, ticket size, and omni-channel offerings supported the company’s top line growth. Its total revenue rose 3.1% on a constant-currency basis.

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Walmart’s expansion of grocery pickup and delivery services, expansion of digital assortments, and continued investment in price are driving its comps and, in turn, its total revenue. However, adverse currency rates, the deconsolidation of operations in Brazil, and a planned reduction in the sales of tobacco at Sam’s Club negatively affected the company’s top line growth rate.

We expect the expansion of its delivery platform, exclusive brand launches, and value pricing to drive Target’s (TGT) comps and net sales growth the coming quarters. Meanwhile, Costco’s unique value proposition, expanded offerings, and higher membership renewal rates are expected to support its industry-leading comps.

Fiscal 2020 outlook

Walmart’s management expects to sustain its sales momentum in fiscal 2020. Management expects the company’s consolidated net sales to increase by at least 3% in fiscal 2020 on a constant currency basis. The acquisition of Flipkart, the expansion of online grocery pickup and delivery services to newer markets, and the expansion of assortments are expected to drive its sales higher.

However, the planned reduction of tobacco sales at Sam’s Club, the deconsolidation of operations in Brazil, and heightened competition in the United States and China could remain a drag.

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