Walmart stock is taking its roughest hits in two years after turning in an earnings performance investors found disappointing, according to Bloomberg. Stocks are down nearly 9 percent, and the company’s drawn down annual profit forecast has investors wondering if the world’s largest retailer by sales is losing a step in its footrace with Amazon.
Walmart is forecasting earnings of $4.75 to $5 for the fiscal year, an estimate that, at the high end, is below the $5.13 for which Wall Street was looking. While the company’s overall sales were out ahead of analysts predictions, its online sales grew at a much, much slower rate than had been on display throughout 2017.
“We were a bit lower than plan [in eCommerce],” CFO Brett Biggs said in an interview. “We had a few operational issues from an inventory replenishment perspective.”
He did not elaborate beyond that comment.
The falloff comes as the segment seems to be getting more competitive by the minute. Amazon has expanded its instant delivery platform via its acquisition of Whole Foods Market and its Prime program. In addition, proposed expansions into wholly new areas like healthcare are also bolstering the eCommerce giant’s reputation.
Those steps by Amazon have, in turn, stimulated big moves across the board, with CVS buying Aetna as part of its bid to weather hurricane Amazon in the healthcare landscape. Similarly, Albertsons announced earlier today that it plans to purchase the part of drugstore chain Rite Aid that isn’t being sold to Walgreens’ Boots Alliance Inc.
“There’s a lot of retail consolidation happening, and it will continue to happen,” Biggs said. “Healthcare is really important to us. If there are ways to serve our customers better, we will look at that.”
Online commerce also looks as though it might need a shot of adrenaline. Sales rose 23 percent during Q4 — a jump, but far less impressive than the 50 percent-plus growth Walmart logged throughout the year. All in, Walmart clocked 44 percent growth in eCommerce sales in 2017. That’s a strong result, according to Neil Saunders, managing director of research firm GlobalData Retail, but not quite strong enough yet — particularly when it comes to younger and more professional shoppers.
“They do not associate Walmart with online or they default to Amazon,” Saunders said. “This is a tough nut for Walmart to crack, and one that it can only break by more heavily marketing its services and proposition.”
There are bright spots, however. Walmart’s same-store sales grew at 2.6 percent during the last quarter of the year, outstripping the 2 percent forecast.