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Wal-Mart Stores Inc (NYSE:WMT)’s Q1 Results Beat Estimates As Online Sales Improve

Wal-Mart Stores Inc (NYSE:WMT)’s Q1 Results Beat Estimates As Online Sales Improve

The first quarter earnings of Wal-Mart Stores Inc (NYSE:WMT) beat analyst estimates on the back of a rebound in the giant retailer’s e-commerce business. In the previous quarter Walmart had a disappointing performance with regards to online sales in the United States but this time round revenues from the e-commerce operations grew by 33%, an indication that the investments the big box retailer has made in its website design and online grocery is paying off.

While Wall Street had been expecting earnings per share to come in at $1.12, the actual figure was $1.14. Thomson Reuters had been forecast revenue to amount to $120.51 but it instead came in at $122.69 billion.

“Online grocery continued to accelerate and [we] had the new Walmart.com site redesign late in the quarter. We also have new brands in e-commerce including the partnership with Lord & Taylor, so there are a lot of different things driving growth there,” said the Chief Financial Officer of Walmart, Brett Biggs, in a CNBC interview.

Increased optimism

Walmart is now optimistic about its e-commerce operations and expects to grow online sales by 40% for the entire year. The rebound in e-commerce follows a sharp slowdown which occurred over the crucial holiday quarter. This resulted in the shares of the online retail giant falling by more than 10% wiping out shaving off approximately $31 billion in market cap.

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According to Marc Lore, Walmart’s e-commerce chief, the redesign of the website is estimated to have enhanced traffic to the big box retailer’s online grocery business by between 10% and 20%.

With regards to international operations sales grew by 4.5%. Currently Walmart is reorganizing its global business portfolio. In Walmart’s largest deal ever the retailer will buy a 77% stake in Flipkart, an Indian e-commerce firm, at a price of $16 billion. The world’s second most populous country boasts of 300 million millenials who are tech savvy and this makes it a highly lucrative market that is poised for growth. Walmart also intends to dispose of a majority interest in Asda Group, a grocery chain in the United Kingdom, to J Sainsbury.

Four straight years of growth

The big box retailer now boasts of four straight years during which it has enjoyed growth in the United States and this is a record no other retailer can match. While the rising gas prices may have reduced the purchasing power of some, Walmart indicated that it was still enjoying robust consumer demand. However consumer traffic growth during this year’s first quarter was lower than last year’s – in the first quarter of this year consumer traffic growth was 0.8% compared to last year’s 1.5%. This was attributed to the delayed spring which made customers consolidate trips. The delayed spring also hurt demand with regards to weather-related categories.

The growth of Walmart’s online grocery pickups is coming at a time when Amazon.com, Inc. (NASDAQ:AMZN) is making chess moves of its own. Just this week the online retail giant announced that when Prime members do their shopping at the outlets of Whole Foods Market, they will get special discounts. Amazon acquired Whole Foods Market last year.

This article was originally posted on FX Empire

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