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Wal-Mart sees gains in e-commerce, lifting shares

Friday, May 19, 2017 - 07:10

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Wal-Mart Stores highlighted strong gains in its e-commerce business that boosted US sales, winning plaudits from Wall Street on Thursday after other retailers released disappointing earnings.

[NEW YORK] Wal-Mart Stores highlighted strong gains in its e-commerce business that boosted US sales, winning plaudits from Wall Street on Thursday after other retailers released disappointing earnings.

The world's biggest retailer is accelerating efforts to "combine our digital and physical assets to make our shipping simple and easy for customers," chief executive Doug McMillon said in a statement.

"Our customers have choices, and we have to earn their business with every interaction." Wal-Mart has been pumping funds into improving its in-store experience, upgrading stores and boosting worker pay, at the same time that it builds out its e-commerce business.

The costs of those initiatives have pressured earnings in recent quarters, and the company reported earnings of US$3 billion in the first quarter of fiscal 2018, down 1.3 per cent from the year-ago period. Revenues were up 1.4 per cent at US$117.5 billion.

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But the initiative has produced gains in comparable store sales in the US, a closely-watched benchmark that rose 1.4 per cent in the first quarter.

E-commerce sales surged 63 per cent and merchandise volume saw a 69 per cent jump.

Analysts at Global Data Retail said Wal-Mart's sharp focus on keeping prices down in grocery was winning some customers back and described growth in e-commerce as evidence of a business "in the ascendancy".

"Overall, this is an encouraging start to the year for Walmart," GlobalData Retail said in a research note.

"This is one US retailer that is ahead of the curve in responding to the evolving landscape." Shares of Wal-Mart rose 1.9 per cent to US$76.56 in mid-morning trading. In contrast, Macy's, Nordstrom and Dick's Sporting Goods all plunged after their earnings reports.

Wal-Mart has boosted its online offerings to 50 million items, up five fold from a year ago, said Marc Lore, president and CEO, Walmart eCommerce US.

The company introduced free two-day shipping for orders over US$35 and discounts on non-store products if a customer picks it up at a store, an effort to exploit its network as it competes with Amazon and others.

"There's more product to buy, you're able to get the product quicker," Mr Lore said on a conference call with reporters.

"The overall experience is improving."

The gains followed a number of Wal-Mart acquisitions over the last year, although executives described the majority of the growth as "organic". Wal-Mart's financial reports do not break out revenues for e-commerce sales.

Chief financial officer Brett Biggs said e-commerce is "still fairly small" within Wal-Mart's US business and there was no immediate plan to disclose more details about the business.

AFP

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