Walmart (WMT, Financial) was the only big box retailer to come out on top on nearly all counts during the fourth quarter.
Costco (COST, Financial) saw its comparable-store sales expand only to watch its bottom line shrink. Target ended 2016 on a miserable note and is now expecting low single-digit comps growth in 2017. Kroger’s (KR, Financial) vaunted comps story came to a halt in 2016, and recovery seems to be at least a few quarters away.
Contrary to what was happening around it, Walmart U.S. reported 1.8% growth in comparable-store sales, allowing net sales to increase by $3.7 billion during the quarter on a constant currency basis. There were several factors at play that allowed Walmart to end 2016 on a happy note.
Walmart’s decision to keep pouring money into its e-commerce business didn’t really work for a long time, which pushed the company toward making some bold acquisitions. Walmart bought Jet.com for $3.3 billion in cash and stock, bringing top talent from Jet.com into the company’s fold.
Walmart also ditched its $49 Shipping Pass program and replaced it with free two-day shipping on orders of at least $35. The company noted, during the fourth quarter earnings call, that the new free two-day shipping program has seen a nice uptick since the launch.
With that, Walmart’s e-commerce efforts seem to be gaining momentum. During the fourth quarter, Walmart's U.S. e-commerce gross merchandise volume increased by 36% as e-commerce sales increased by 29% during the quarter. Though its overall online sales are still far away from catching up with Amazon’s (AMZN, Financial), it’s good to see Walmart’s online sales growing at strong double-digit rates.
Speaking of e-commerce growth, Walmart CEO Doug McMillon noted during the fourth-quarter earnings call:
“We continue to invest in e-commerce to accelerate growth. We’re gaining traction and moving faster. We’re the second-largest U.S. online retailer by revenue, one of the top three online retailers by traffic, and our Walmart app is among the top three apps in retail. We acquired Jet.com in the second half of last year and welcomed Marc Lore, the CEO of our U.S. e-commerce business. Marc is moving quickly.”
Disclosure: I have no positions in the stock mentioned above and no intention to initiate a position in the next 72 hours.
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