Global retailer Walmart reported fiscal fourth quarter and full-year financial performance which provide important insights for retail industry supply chain and sales and operations teams regarding the recent holiday fulfillment period.

The overall financial performance was billed as disappointing, missing equity analyst expectations.


Highlights for the fiscal Q4 quarter included:

  • Total IFRS quarterly revenues of $141.7 billion, a 2.1 percent year over year increase, compared to an expected $142.9 billion.
  • Reported IFRS quarterly Operating Income of $5.3 billion, a 12.3 percent year over year decrease, also short of analyst expectations.
  • U.S. same store sales growth of 1.9 percent vs. expectations of 2.9 percent.
  • Online sales during the holiday quarter increased 35 percent , reportedly fueled by increased online grocery sales, topping an internal growth target of 35 percent.


Full year financial highlights included:

  • Total IFRS annual revenue of $524.0 billion, a 1.9 percent year-over-year increase.
  • Reported IFRS Operating Income of $20.6 billion, a 2.7 percent year-over-year decrease.
  • U.S. same store sales growth of 2.8 percent.
  • Total online sales growth of 37 percent net


In briefing investors, CEO Doug McMillon indicated that holiday sales leading up to the Christmas holiday were softer than expected.  The retailer pointed to weaker than expected sales of apparel, toys and gaming devices. Similar sentiments were reflected by financial performance reports from general merchandise retailers Target and Kohl’s.

Walmart’s CFO also pointed to “pressures related to associate scheduling” as an added factor. Further noted as impacting operating income was a disruption in Chile, a business restructuring and some income tax matters.

What this blog found to be of interest was a statement that transactions at the retailer’s U.S. stores were up 1 percent during the most recent quarter, down from 1.5 percent a year earlier. The average ticket value was reported to be up 0.9 percent compared to 2.9 percent a year ago.  Such a trend would imply that Walmart’s effort to integrate online and in-store shopping experiences hit a speed bump during the holiday period. One could speculate that consumers were more driven by online grocery pickup vs. physically entering the store. Walmart executives indicated to analysts that new efforts are being planned to promote more profitable non-grocery items in online shopping carts.

A factor being reported by financial media are concerns that the retailer’s E-commerce operations remain unprofitable, with performance in the all-important holiday quarter reinforcing that online fulfillment costs are not meeting expectations. Evidence of that challenge are reflected by reports that efforts are now underway to combine online and physical store inventory buying teams to provide more consistency in supplier and inventory pricing among both buyer channels. Combined buying groups will now report to the retailer’s recently appointed Chief Merchandising Officer.

We suspect that overall transportation and logistics budgets will undergo continued scrutiny in the coming weeks and months.


Forward Guidance

In terms of current quarterly and fiscal year guidance, the retailer set expectations for 3 percent net sales growth, at least 2.5 percent comparable in-store sales growth, and online sales growth of 30 percent.

This guidance reportedly also disappointed Wall Street. However, it may be a true reflection of the challenge at-hand, namely that same day or two-hour delivery adds enormous expense if order volume margins cannot clear the threshold of such expenses. That is likely going to be the ongoing challenge of online retail.


Reader Takeaway

Considering the reported financial performance of many retailers at the conclusion of the 2019 holiday fulfillment period, there are indeed consistent signposts related to needs for controlling or reducing online fulfillment costs.

It is truly interesting that the contrast is being made to Amazon, whose holiday quarter financial performance far exceeded equity analyst expectations. There are reported indications that online consumers flocked to the online retailer. Market analytics firm eMarketer has estimated that Amazon’s share of U.S. E-Commerce sales in 2020 stand at 38.7 percent, a rather significant market share number.

As Supply Chain Matters has indicated in prior online retailer commentaries, Amazon serves as an online industry disruptor, plowing billions of dollars into more automated customer fulfillment and in 2019, raising the bar for Amazon Prime online delivery to a one-day standard.

Not all retailers have the ability to plow in a single year, upwards of a billion dollars in added automation and last-mile fulfillment capability, even without an extensive brick and mortar store presence. Now with Walmart itself showing signs of added challenges, its likely back to the drawing board for many retailers.

While the 2019 holiday fulfillment was all about matching Amazon’s one-day  or same day delivery capabilities, planning for this year’s holiday fulfillment quarter will likely be focused on meeting that milestone at targeted margin levels. While online grocery was the novel new draw, online grocery will likely have to be factored with drawing more consumers back into the physical store.




Bob Ferrari

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