And while the retailer is expected to show profit margins that are the lowest in years, it’s also expected to report an increase in sales, reported The Financial Times. The report noted that even with government data released last week that showed U.S. retail sales declined the most during the month of December since 2009, so-called like-for-like revenue at Walmart is forecasted to have jumped more in the last three months of the year thanks to the holiday shopping season. According to the report, like-for-like sales in the U.S. are expected to have jumped 3.1 percent. It would be down from 3.4 percent in the third quarter but up from 2.6 percent in the fourth quarter of 2017. Its Q4 results are also expected to showcase how Walmart’s investments to take on Amazon and other eCommerce players have been working.
According to The Financial Times, in addition to the investments to push back the competition, Walmart is facing rising transport and labor costs, which are impacting margins. Walmart has reportedly raised the wages for its truckers to close to $90,000 on average as it tries to lure drivers its way. That, along with other initiatives, is expected to have driven margins in the fourth quarter to 23.9 percent, reported The Financial Times, citing analyst estimates compiled by S&P Capital IQ. That would be the weakest gross margins Walmart has seen in around eight years, noted the report. But it shouldn’t come as a surprise, since Walmart chief executive Doug McMillon told shareholders that Walmart has to invest and engage in more risk-taking if it wants to be a leader in overhauling retail.
When Walmart reports Q4 results this week, investors will look to the online business for clues that its investments are paying off. They expect results that are better than the year-earlier fourth quarter when Walmart struggled to keep up with Amazon.