Walmart earnings tumble as online investments bite

The world's biggest retailer sees profits fall amid efforts to boost its e-commerce operations as pressure grows on bricks-and-mortar establishments.

A Walmart store in Rosemead, California. The company has reported a fall in profits. Frederic J Brown / AFP

Walmart’s fourth-quarter earnings fell nearly 18 per cent as the world’s largest retailer was hurt by its investments in e-commerce and stores.

But Walmart saw its US business accelerate – both in customer counts and for a key sales metric – during the period that covers the critical holiday shopping season. It also enjoyed a surging global e-commerce business. The company also said Tuesday that it is raising its dividend.

Walmart, like other traditional retailers, has been trying to improve its online operations to be a stronger challenger to online leader Amazon.com. The holiday shopping season was challenging for many retailers, underscoring the changes brick-and-mortar stores need to make. But Walmart’s results show that it’s been able make inroads.

“We’re moving with speed to become more of a digital enterprise and better serve our customers,” said Doug McMillon, chief executive of Walmart Stores.

Overall, Walmart has retooled its own online shopping programmes and bought up some smaller companies with online strengths. It spent more than us$3 billion for Jet.com in a deal aimed at helping it to attract younger and more affluent customers. And it just announced that it had bought the outdoor and gear seller Moosejaw for $51 million as it expands its online product selections. Moving closer to the terms of Amazon’s powerhouse Prime programme, Walmart is now offering free two-day shipping on online orders of its most popular items with a minimum purchase order of $35. Amazon Prime still costs $99 a year, but comes with services such as streaming music and video.

Walmart had also said it planned to slow its new store openings and pour money into its online efforts, technology and store remodels.

Global e-commerce sales grew 29 per cent in the quarter, up from 20.6 per cent in the prior period. Walmart said it is working to accelerate the integration between Walmart and Jet.com, and trying to take advantage of its scale in areas such as shipping and sharing its product selection. Walmart last year also raised its stake in JD.com, China’s second-biggest e-commerce site. But online sales still only account for a fraction of its total.

Besides melding its online and store businesses so shoppers can jump back and forth, Walmart is has launched changes designed to make its stores cleaner and its customer service friendlier and faster. The company has also invested $2.7bn in higher wages and training for workers, a move that it says has helped to lower turnover and improve customer service.

The company said Tuesday it earned $3.76bn, or $1.22 per share in the three months ended Jan. 31. That compares with $4.57bn, or $1.43 per share, a year ago.

Excluding certain items, earnings per share were $1.30. Sales excluding memberships fee rose 0.8 percent to $129.75bn.

* AP

Follow The National's Business section on Twitter