Wal-Mart Posts Strong Holiday Sales, But E-Commerce Battle With Amazon Pinches Profit

This content has been archived. It may no longer be accurate or relevant.

From The Wall Street Journal:

Wal-Mart Stores Inc. reported strong sales over the winter holiday season, a marked contrast with the weak numbers posted by many brick-and-mortar competitors including Target Corp. and Macy’s Inc.

Wal-Mart said Tuesday that sales in stores open at least 12 months rose 1.8% in the quarter ended Jan. 31, the 10th consecutive quarter of gains. More shoppers came to its stores and spent more when they did. But the strength of the company’s U.S. store business continues to come at the expense of profits, which fell 18% in the quarter.

The retail behemoth is investing billions to raise U.S. store worker wages, lower prices and expand e-commerce sales to better compete with Amazon.com Inc.

“Rapid advances in technology mean we need to become more of a digital enterprise—and that’s what we’re doing,” Chief Executive Doug McMillon said in a prerecorded call to discuss the results.

Still, Wal-Mart’s global e-commerce sales growth decelerated compared with the previous quarter. Online sales rose 16% including the first full quarter of sales from Jet.com Inc., which Wal-Mart purchased in September. In the previous quarter e-commerce sales rose 21%.

. . . .

During the year spending rose 11% at online retailers and fell almost 6% at department stores, according to Commerce Department figures.

Link to the rest at The Wall Street Journal (Link may expire)

PG was interested that Wal-Mart is increasing salaries among its store workers to compete with Amazon more effectively.

Given that Wal-Mart employs about 1.5 million store workers, that’s a lot of money going into the consumer economy. In the US, Wal-Mart’s average, full-time hourly wage is $13.75 for store workers.

11 thoughts on “Wal-Mart Posts Strong Holiday Sales, But E-Commerce Battle With Amazon Pinches Profit”

  1. PG was interested that Wal-Mart is increasing salaries among its store workers to compete with Amazon more effectively.

    CostCo has always paid better than the other big box stores. This lets them have fewer employees. As Walmart hourly wages rise, we should watch total employment and total labor costs.

  2. “…Wal-Mart’s global e-commerce sales growth decelerated compared with the previous quarter. Online sales rose 16% including the first full quarter of sales from Jet.com Inc., which Wal-Mart purchased in September. In the previous quarter e-commerce sales rose 21%.”

    Big write-off coming sooner or later on JET.

    Still, they did prompt Amazon to reverse their increase of the (non-prime) free shipping trigger and bring it back to $35. Books it’s the same $25 it’s always been.

    https://www.cnet.com/news/amazon-lowers-free-shipping-minimum-to-35-from-49-matches-walmart/

  3. I would honestly love to see Wal-Mart emerge as the Pepsi to Amazon’s Coke in the on-line sphere. They’re the only American company I can think of that has the financial werewithal to pull it off, to say nothing of how brilliant at least some of their in-house EDP has been in the past, particularly with regard to inventory management. Sadly, I just don’t think the folks in Bentonville really get it, somehow. I certainly can’t ever see them setting up something like the Amazon Marketplace.

    • Their problem isn’t “getting it” as much as the headstart Amazon has on them. Much like Target, they didn’t take online seriously until this decade, after the depression became apparent.

      • it is not just the head start. Amazon is also willing to match anything you do to try to compete with them.
        With ebooks we got a lower device price and library lending once the nook did it. with those subscription companies we got whatever amazon is calling it KU?.
        with walmart lowering free shipping minimum, amazon does too.

        the only built in thing that walmart has is taking returns in the store… but mailing a return is pretty easy with amazon.

        • Well, Amazon is willing but they’re also *able* to match any attempt to undercut them *because* of the head start. They have a bigger online cutomer base in place and, most importantly, they have a larger infrastructure built up over 20-plus year. To catch them, a competitor has to match that infrastructure and fast. Which means lots of spending now that Amazon did then. Which means lower profits (if any) now for the wannabe.
          It also allows Amazon to leverage that infrastructure to get into things like gadgets, bookstores, restaurant delivery, student loans, and pretty much anything that is even close to their existing businesses, like movie and TV show production.

          At this point, to go toe to toe with Amazon across the board, Walmart would have to merge with Google or Microsoft. Or IBM, which might be doable. 😉

          Not going to happen, of course.

          So unless Amazon screws up their first mover advantage they’ll always be ahead. What Walmart can aspire to is to stay ahead of the rest of the wanabes like Target, Rakuten USA, Overstock, etc.

  4. In the US, Wal-Mart’s average, full-time hourly wage is $13.75 for store workers.

    The catch here being that the majority of Wal-Mart’s store employees are part-time. Held ruthlessly to a “hard” limit of no more than 24 hours a week. Or such is my impression from talking to people who work in my local superstore, most of whom seem more than willing to go full-time should the opportunity present itself.

Comments are closed.