Walmart’s sales fall short at home amid deal spree overseas
New York: Walmart Inc., busy making deals abroad, struggled to gain back some momentum in its home market last quarter.
Comparable sales at US Walmart stores grew 2.1% in the first quarter, the company said on Thursday, falling short of analysts’ estimates. Customer visits rose just 0.8%, the slowest growth in more than a year, as unseasonably cold and wet April weather kept American shoppers from visiting the stores.
Chief executive officer Doug McMillon is overhauling the retailer’s global footprint, stepping back from the UK after two decades and spending $16 billion to acquire a controlling stake in India’s biggest e-commerce site. Still, Walmart generates most of its profits and sales in the US, and its heavy spending to lower prices and expand its online business have investors concerned about the price it’s paying to keep up with Amazon.com Inc. The shares had fallen 13% this year through Wednesday’s close, after two straight years of increases.
Online revenue in the US rose 33% in the fiscal first quarter ended 30 April, better than the holiday quarter’s lackluster performance but below the 40% pace the company had forecast for the full year.
Walmart’s adjusted earnings amounted to $1.14 a share last quarter. That beat analysts’ average projection of $1.12.
Shares were little changed at $85.70 in premarket trading, following the results.
The company’s recent moves include combining its British chain Asda with J Sainsbury Plc, uniting the UK’s second and third-biggest supermarket chains in a transaction worth about $10 billion. Less than two weeks later it inked its biggest-ever deal to gain a majority stake in India’s Flipkart Group, striking a blow against Amazon, which has spent billions to gain customers in the world’s second most-populous nation.
The Flipkart deal should help position Walmart in a fast-growing market, but for now it risks crimping earnings that are already under pressure from rising food and transportation costs in the US Gas prices are also on the rise, which could prompt Walmart’s lower-income shoppers to spend less on each trip or even come into the stores less often.