February 20, 2018
Walmart Feb. 20 reported low single-digit increase in same-store entertainment sales during the fourth quarter (ended Jan. 31), driven by the winter holidays. It was the strongest entertainment quarter in the fiscal year. Walmart doesn’t disclose actual revenue figures.
Entertainment includes electronics, toys, cameras and supplies, photo processing services, cellular phones, cellular service plan contracts and prepaid service, DVD, Blu-ray Disc movies, music CDs, video games and books.
Company shares fell more than 10% ($10.67) after the world’s largest retailer reported ecommerce quarterly growth of 23% — down from 63% a year ago. Indeed, the company is pulling out of ecommerce operations in Brazil.
“We were a bit lower … [in e-commerce],” said CFO Brett Biggs, who attributed the decline in part to operational and replenishment issues.
It was the largest stock drop in more than two years – largely reflecting Wall Street concerns whether Walmart can keep pace online with ecommerce behemoth Amazon.
But not everyone is concerned.
“I think it might be an overreaction,” said Bloomberg gadfly Sarah Halzack.
Specifically, Halzack reiterated Walmart is calling for 40% fiscal 2019 ecommerce growth, which she suggests underscores Q4 growth as an anomaly.
“I think it’s important to note that this is stronger growth being seen by many of their retail peers,” Halzack said.
The analyst believes that much of Walmart’s stock growth in the past year was fueled by support for the retailer’s ecommerce operations, which included the acquisition of Jet.com.
“Over the past three quarters, we saw these ecommerce gains above 50% and those were clearly something of a cocaine hit for investors. A way to make them feel good,” Halzack said.