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Walmart's online sales grow 33%

Walmart's online sales are growing and Americans still flood into its stores.Digital sales jumped 33% last qua...

Posted: May 17, 2018 9:59 PM
Updated: May 17, 2018 9:59 PM

Walmart's online sales are growing and Americans still flood into its stores.

Digital sales jumped 33% last quarter, Walmart said Thursday. Wall Street was glued to that number because CEO Doug McMillon is scrambling to transform the world's largest brick-and-mortar retailer for the digital era.

Walmart expects online sales to increase 40% for the full year. E-commerce makes up only 4% of sales in the United States, estimated Laura Kennedy, vice president of retail insights at Kantar Consulting.

"The real issue with Walmart is that most of what they sell is food and people don't buy food online," she said.

Walmart has embarked on an ambitious long-term plan to shift perceptions of its brand. It wants to build its customer base from low- and middle-income households to younger, wealthier Americans captivated by Amazon.

Related: How Whole Foods will help Amazon rule the world

"We are changing from within to be faster and more digital, while shaping our portfolio of businesses for the future," McMillon said in a news release Thursday.

Retooling abroad has been Walmart's focus in recent months as it searches for growth and market share.

Walmart pulled back on a mature UK market by selling control of supermarket chain Asda and struck a $16 billion deal for Flipkart in India, the largest purchase in its history. It will take years for Flipkart to make a profit, but Walmart believes it can unlock India's approximately $200 billion online market.

Related: What is Walmart's global plan?

It has also gobbled up niche retailers such as ModCloth, Bonobos, Moosejaw and Hayneedle to expand its online muscle. On Wednesday, it announced a partnership with fashion chain Lord & Taylor for a landing page on the website.

But Walmart's biggest move in the United States, a $3 billion deal for Jet.com, has disappointed investors. Walmart is scaled back marketing on Jet except in urban areas while deploying its newly-redesigned website in mid-America.

Related: Meet the new Walmart customer: Higher-end and digital-savvy

"Walmart is just a really well-known brand for value throughout the country," McMillon said in February. "When you get into Oklahoma and Texas, in the middle of the country, it just makes a lot of sense to invest in that brand."

The retailer's success chasing online dollars has been mixed so far. In the fourth quarter, Walmart's online growth slowed to 23% after strong 50% and 60% gains the previous two quarters.

Walmart miscalculated how much inventory it would need to keep pace with soaring demand during the holiday shopping season. Those supply-chain growing pains sparked a Wall Street selloff. Walmart's stock had its worst day in 30 years, and it still hasn't recovered: It's down 13% this year.

Related: Walmart figured out its Amazon strategy. So why's the stock down 13%?

Wall Street shrugged off what McMillon called a "solid" quarter Thursday. Shares fell 2%.

Sales at Walmart's 4,760 US stores that have been open for at least a year rose 2.1% and foot traffic was up 0.8%. Ticket sizes also jumped. All three measures signal that shoppers continue to head to Walmart's stores frequently and are spending more money when they shop. A colder April hurt traffic, the company said.

Walmart isn't building new stores, instead remodeling 1,500, raising employee wages, and tightening demands on suppliers to squeeze out every dollar from existing locations.

"Today's results are proof not only that Walmart is making gains in its day-to-day business, but that it is now a company firmly in the midst of a dramatic transition," Neil Saunders, managing director of GlobalData Retail, said in an email.

Walmart's expansion of home grocery delivery and curbside pickup contributed half of the same-store sales growth. Online grocery has failed to take hold in the United States, but analysts expect it to grow in the future.

Grocery accounts for more than half of Walmart's $500 billion in annual sales, and the company's future depends on its ability to compete with Amazon as it wades into the battle with Whole Foods. Kroger stepped up its digital capabilities Thursday by taking a minority stake in British online supermarket chain Ocado to leverage its delivery tech.

Walmart's link to nearly every US household - 90% of the country lives within 10 miles of a store - could give it an advantage in the race, argues Cowen analyst Oliver Chen. Walmart can offer customers a rare combination of curbside pickup and buy online, pickup in store - so-called "click and collect." That could help it keep down costly delivery charges.

But investments in online grocery are weighing on profit. Walmart's margins in the United States shrank 3.1% from a year ago.

Cheaper prices also cut into profit. Walmart has lowered prices at stores to stay ahead of competitors. "If they are nothing else, they have to be the everyday low price provider," Kennedy said.

Higher oil and third-party shipping costs dented the company's bottom line, too. America's truck driving shortage has impacted nearly every big company in the country.

Mississippi Coronavirus Cases

Data is updated nightly.

Cases: 295295

Reported Deaths: 6724
CountyCasesDeaths
DeSoto19690230
Hinds18812389
Harrison16722280
Rankin12725265
Jackson12603228
Lee9691160
Madison9466203
Jones7978147
Forrest7217138
Lauderdale6836226
Lowndes6031140
Lamar588480
Lafayette5736113
Washington5218130
Bolivar4612123
Oktibbeha441493
Panola430894
Pearl River4174130
Warren4130115
Pontotoc409771
Marshall403392
Monroe3990126
Union395674
Neshoba3817169
Lincoln3544103
Hancock347975
Leflore3376118
Sunflower318986
Tate302974
Pike300796
Scott293970
Alcorn291862
Itawamba290075
Yazoo289963
Tippah278965
Coahoma278668
Copiah278158
Simpson275879
Prentiss269858
Wayne254241
Marion252778
Leake252671
Covington248980
Grenada247578
Adams234678
George231845
Newton229952
Winston221777
Jasper213445
Tishomingo212365
Attala206569
Chickasaw201152
Holmes182370
Clay179251
Stone172429
Tallahatchie170939
Clarke169371
Calhoun157928
Smith152832
Yalobusha144836
Greene127733
Walthall124240
Noxubee122831
Montgomery122639
Perry121734
Lawrence120421
Carroll118425
Amite111734
Webster110631
Jefferson Davis101931
Tunica99023
Claiborne98429
Benton93524
Humphreys92827
Kemper90223
Quitman77214
Franklin76119
Choctaw69617
Jefferson62727
Wilkinson62426
Sharkey48917
Issaquena1676
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Alabama Coronavirus Cases

Cases: 494421

Reported Deaths: 9991
CountyCasesDeaths
Jefferson711451374
Mobile36184735
Madison32457458
Tuscaloosa24213412
Montgomery22636517
Shelby22020214
Baldwin19790284
Lee14980154
Morgan13693251
Calhoun13307287
Etowah13192320
Marshall11269209
Houston10102261
Elmore9408185
Limestone9376134
Cullman8903181
St. Clair8839224
Lauderdale8601212
DeKalb8465175
Talladega7552164
Walker6538258
Jackson6503103
Autauga630391
Blount6106127
Colbert5993119
Coffee5254102
Dale4648107
Russell405233
Franklin399478
Covington3970106
Chilton3883100
Escambia378172
Tallapoosa3596143
Clarke343753
Chambers3421111
Dallas3412141
Pike293372
Lawrence283684
Marion283495
Winston247368
Bibb245460
Geneva240270
Marengo236557
Pickens224555
Barbour212451
Hale210668
Fayette200957
Butler197566
Henry182641
Cherokee177139
Monroe166339
Randolph163840
Washington156635
Crenshaw145254
Clay145054
Macon142343
Cleburne137841
Lamar133133
Lowndes131251
Wilcox122525
Bullock117136
Conecuh106724
Perry105827
Sumter98632
Coosa89224
Greene88232
Choctaw55123
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