Walmart's bruising battle with Amazon cuts its profit even as revenue rises

Walmart stock took a beating Tuesday, falling 10.2 percent for its biggest single-day percentage drop in 30 years.
Patrick T. Fallon, Bloomberg News
Walmart stock took a beating Tuesday, falling 10.2 percent for its biggest single-day percentage drop in 30 years.

NEW YORK — Walmart is getting bruised in its battle with online leader Amazon.

The world’s largest retailer on Tuesday reported a smaller-than-expected fourth-quarter profit as it wrestled with slower e-commerce sales during the busiest time of the year.

Its stock took a beating, falling 10.2 percent for its biggest single-day percentage drop in 30 years. Walmart’s decline was a big factor in the Dow Jones industrial average’s 1 percent fall.


The quarterly profit numbers overshadowed the discounter’s better-than-expected sales at established stores and higher customer traffic as online services linked to its stores attract more shoppers.

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The company’s mixed results raise concerns its push to narrow the gap between itself and may be losing steam — despite huge investments in both its digital business and its stores, where it has taken steps like lowering prices.

Walmart’s e-commerce sales growth in the United States slowed to 23 percent during the fourth quarter, a sharp decline from 50 percent in the third quarter. It noted last year’s results got a big boost from its acquisition of the online retailer But it acknowledged mistakes. A surge of TVs, toys, and electronics into its warehouses during the holiday season crowded out more basic items, for example. Yet Walmart finished the year with more than 40 percent growth in US online sales and expects that online sales will be revived this year to hit that same pace.

Walmart and other retailers are looking at new ways to compete amid swiftly changing shopping habits.

Walmart is building fewer big stores and focusing on its online business while beefing up benefits for workers.


Since buying for more than $3 billion a year and a half ago, Walmart has added online services, bought brands like Bonobos and ModCloth, and vastly expanded the number of items available online. It’s also getting ready to launch an overhauled website with a focus on fashion and home furnishings. It has teamed up with Lord & Taylor to create dedicated space on its site.

Walmart has aggressively cut prices and plans to double the number of stores where groceries can be ordered online and picked up curbside this year to 2,000.

But Walmart has a long way to go before it even gets close to Amazon’s online dominance. Amazon has leveraged its $99-a-year Prime membership program into intense loyalty from customers, and it recently stepped into Walmart’s turf, no longer content with only online sales. After paying $14 billion for Whole Foods Market last summer, Amazon announced two-hour deliveries from the grocery chain for its members.

Walmart Inc. earned $2.17 billion, or 73 cents per share, in the three-month period ended Jan. 31, versus $3.76 billion, or $1.22 per share, a year earlier.

Excluding charges, it earned $1.33 per share, short of Wall Street expectations. Analysts surveyed by Zacks were calling for $1.36 per share. Walmart posted revenue of $136.27 billion, exceeding the average analyst estimate of $135.04 billion.


Revenue at stores open at least a year rose 2.6 percent at namesake US stores, the 14th straight quarter of increases.

At Walmart’s Sam’s Clubs, same-store sales rose 2.4 percent. The company announced earlier this month that it was offering free shipping for premium members.

Last month, Sam’s Club began closing 63 US clubs while turning a dozen of them into warehouses for digital sales, to speed deliveries.