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Walmart deviates from failures as US prices rise 5.6%

Short dive:

  • Walmart has built growth over the past year with comparative US sales up 5.6% in the fourth quarter and grew 6.4% for the full fiscal year. Total sales in the US for the fiscal year increased by 6.3% to $ 393.2 billion.
  • As shoppers adjust to the new stages of the pandemic, the company experienced a slowdown in its digital growth in the 4th quarter, with e-commerce sales growth in the US of just 1%.
  • During the year Walmart also brought in billions from non-retail revenue streams. The company’s advertising business reached $ 2.1 billion for the fiscal year, which helped offset falling supply costs in profit. Walmart also posted about $ 5 billion in membership and other revenue for the year, up 27.4% from the previous year

Diving Insight:

In a year of unprecedented shocks in supply chains, Walmart has relied on its massive scale to keep its shelves in reserve for an important fourth quarter.

Since the holiday shopping season began last year, the retailer along with its biggest competitors has sought reassure customers that they will be able to cope with bottlenecks and other failures.

At the time, Joe Metzger, executive vice president of supply chain operations at Walmart US, noted that the retailer was chartering ships, redirecting ocean and domestic shipping, raising wages, hiring new truck drivers and supply chain staff and increasing capacity. – all to ensure that its shelves are well stocked.

In a revenue statement, Walmart said it prioritizes stock levels, and stocks rose 28% in the U.S. in the 4th quarter. This was partly due to inflated prices for these goods during the year of failures, as well as higher levels of transit traffic as a result of replenishment activity and sales growth.

However, sales were expensive. In an Presentation for the investorThe company said supply chain spending in the 4th quarter exceeded expectations by more than $ 400 million. This is more than the revenue of many retailers for the quarter.

But Walmart can absorb these costs largely due to its size and financial firepower. Now it also has billions of dollars that do not affect supply chains. Of note is his advertising business worth more than $ 2 billion, which has survived overhaul last year.

“The business model is changing,” CEO Doug McMillan told analysts on Thursday. “I think that’s the headline. We have a business that’s getting more digital. The e-commerce business is growing, first and foremost. It’s giving us the opportunity to increase advertising revenue. It’s growing fast and it’s growing in all markets.” .

Although this income is not related to retail per se, Macmillon tied it to the retail company. “Policies are useful,” Macmillon said. The chief added that these margins “help us keep prices low for customers” and are in line with operating profit figures.

As for the decline of the digital retail business – the growth of which has been a management priority for many years – it has been at the top growth of almost 70%. in the 4th quarter of last year. Despite the harsh comparison, the slowdown, however, represents a marked deterioration in Walmart’s growth trajectory, ”Neil Saunders, managing director of GlobalData, said in comments via email.

“In our view, this is further evidence that the story of ‘digital kill stores’ has been completely exaggerated and justifies Walmart’s multi-channel approach to investment,” Saunders added.

Walmart management expects further growth. The instructions for 2023 estimate comparable sales growth in the US of more than 3%.

https://www.retaildive.com/news/walmart-shrugs-off-disruption-as-us-comps-grow-56/619013/ Walmart deviates from failures as US prices rise 5.6%

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