Coverage: Wal-Mart earnings show strong growth in online sales

Wal-Mart Stores Inc. reported e-commerce sales grew 63 percent in the United States in the latest quarter, evidence that the country’s largest retailer is making headway in its effort to be as prominent online as it is across the American landscape.

Rachel Abrams of the New York Times has the news:

Now the question is whether the company can sustain that growth to become a fiercer competitor to the online juggernaut Amazon. Walmart has invested heavily into building its online business over the years, but the results have been mixed — and Amazon has surged.

Walmart’s latest strategy, put in place by its current chief executive, Doug McMillon, has several parts: expand the number of products available online, better leverage its huge physical warehouses and distribution centers to reach customers quickly across the country, and aggressively pursue deals for online stores.

The biggest of those deals, in which Walmart paid $3.3 billion for the bulk e-commerce retailer Jet.com last year, was part of the plan to offer customers more products through the web.

The earnings results on Thursday gave only hints of about how much the acquisitions gave the company a one-time bump in sales, rather than long-lasting fruit from other changes the company has made. Overall sales rose 1.4 percent, to $117.5 billion, in the latest quarter compared with a year ago.

Walmart executives said that the “majority” of the company’s online growth was organic — meaning not from the companies it had bought — but did not break out specific numbers. And while they were hesitant to declare that such growth was the new normal, they credited an expanded online assortment for helping to lure more repeat customers willing to open their wallets a little wider.

Lauren Thomas of CNBC.com focused on Wal-Mart’s grocery push:

Competition in the supermarket business is only intensifying.

Amazon‘s AmazonFresh initiative is rolling out brick-and-mortar pick up locations, Target has tapped a Kroger executive to run its grocery division, and discount chains Aldi and Lidl are encroaching on U.S. market share.

Everybody wants a piece of the pie, literally.

But Wal-Mart’s investments are putting the retailer in a good place, as its first-quarter results show, while it pours money into keeping its prices low and beefing up its digital operations.

Wal-Mart’s grocery business saw its food categories deliver their strongest quarterly comparable sales performance in more than three years, Wal-Mart CEO Doug McMillon told analysts and investors Thursday.

“Online grocery also continues to perform well, and we’re on track to scale the [grocery] offering to more stores this year in several countries, including the U.S.,” McMillon went on.

By acquiring Jet.com last year and bringing the website’s founder, Marc Lore, on board to spearhead Wal-Mart’s e-commerce division, the traditionally brick-and-mortar retailer has made clear its plans to move from bricks to clicks, as analysts say.

And Wal-Mart wants to make sure its grocery offering is particularly appealing to shoppers online.

Matthew Boyle of Bloomberg News reported that Wal-Mart’s stores also did better than expected:

Growth at Wal-Mart’s brick-and-mortar stores was more measured, though it still outpaced estimates. U.S. same-store sales rose 1.4 percent, narrowly beating analysts’ expectations, fueled by a 1.5 percent increase in customer traffic. That marked the 11th-consecutive period of positive sales in the company’s home market.

The numbers offer a stark contrast with those of rival Target Corp., which reported results Wednesday and has suffered negative same-store sales for four straight quarters.

Wal-Mart earnings amounted to $1 a share in the period. Analysts had estimated 96 cents.

The company expects profit of $1 to $1.08 in the second quarter, compared with a projection of $1.07. U.S. same-store sales will grow 1.5 percent to 2 percent, Wal-Mart said, higher than the 1.2 percent analysts had expected prior to the results.

“We feel good about the momentum across the business,” Chief Financial Officer Brett Biggs said on a call with reporters.