In a prior Supply Chain Matters commentary, we questioned the U.S. Commerce Department’s head-scratching report on December 2018 retail sales. If the reported December data is taken at face value, it would represent a significant decline in 2018 holiday fulfillment volume levels, especially for the last month.
This week, global retailer Walmart reported what was headlined as strong comparable holiday sales gains in the U.S., which has broader meanings for the 2018 holiday quarter.
Regarding overall financial performance, the retailer’s quarterly results for the January-ending quarter represented one of the most impressive results in ten years, including a 4.2 percent rise in U.S. comparative sales volumes. Growth areas were noted in grocery, toys and online shopping categories.
Once more, the retailer indicated that E-commerce sales rose 43 percent in the quarter and 40 percent for the full year fiscal year. That is a rather significant growth number and likely a reflection that online merchandizing and fulfillment strategies are resonating with broader categories of consumers. However, a caution sign was indications from company executives that profit margins had declined as a result of a higher percentage of sales coming from E-Commerce orders, coupled with higher online investment costs. Continued higher transportation costs are also impacting margins. None the less, quarterly profit increased 69 percent year-over-year which is likely a reflection of much higher volumes. Total revenues increased 1.9 percent year-over year.
If one factors the government’s recent reporting of December retail sales at face value, along with forecasts that January was lackluster as well, then the implication is that Walmart gained some significant market share across various categories. Considering both Amazon’s reported 20 percent increase in predominately online revenues and Target’s reported 29 percent increase on online holiday sales, the implication is that online was indeed the predominant buyer choice for the 2018 holiday period.
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