US retail giant Walmart bets its online sales will expand
By Matthew Boyle - Oct 18th 2018, 10:42
Walmart expects some of its fastest sales growth this decade as it draws in more digital customers in its turf war against Amazon.com.
Same-store sales in the US excluding fuel would grow 2.5% to 3% in the next financial year, the company said ahead of its shareholder meeting. That follows expected growth of about 3% this year, which would be the fastest pace since 2008, according to Bloomberg data.
E-commerce sales will expand about 35%, boosted by more online-grocery pickup locations and new products.
The share price rose as much as 1.1% to $94.89 as of 9.35am in New York. Shares are down 5% in 2018.
Walmart’s web business has been a bright spot for the retailer as services such as online grocery and acquisitions of upscale brands have brought in new customers, who spend nearly twice as much as those who shop only at its stores.
Walmart should benefit from the bankruptcy of Sears heading into the crucial holiday season, even as concerns linger over the effect of Chinese tariffs and wage pressure from rivals Amazon and Target.
Investors thus far have been willing to accept losses from the online business as the necessary cost of keeping pace with Amazon, which has made inroads in categories such as apparel.
Amazon is now trying to boost its fresh food business and grab market share from the nation’s two biggest grocers, Walmart and Kroger.
Walmart has responded by lowering prices and introducing grocery service through its Jet.com subsidiary in urban markets such as New York City.
Walmart said its $16bn acquisition of Indian e-commerce leader Flipkart would lower earnings in 2018 and 2019. Excluding Flipkart, 2019’s earnings would see a low- to mid-single digit increase, the company said, after the 5% boost it already forecast for this year.
"While the top line outlook for 2019 looks healthy and was generally in line with expectations, the margin view for next year did come in softer than expected," Chuck Grom, an analyst at Gordon Haskett Research Advisors, said.Business Live
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