Wal-Mart Stores Inc. (WMT, Financial)Â reported second-quarter 2018 comparable store sales growth of 1.3% in the U.S. as e-commerce sales continued to expand at double-digit rates.
The comparable store sales growth was that much sweeter for Walmart because traffic increased 1.3% despite the company increasing tickets by 0.5% during the period. With most retailers struggling to hold their ground, it is not easy to pass on price increases and still expect traffic to grow. But Walmart managed to do both, a good indication of its increasing strength.
Walmart’s comparable store salesin the U.S. have now increased for 12 quarters in a row. It has been nearly three years since the retailer reported comparable sales growth of -0.1% and 0% in the first two quarters of fiscal 2015. Walmart has not looked back since, steadily improving its numbers despite a rampaging Amazon.com (AMZN, Financial), which has been expanding its North American sales at double-digit rates.
Over the last two years, Walmart made several acquisitions on the e-commerce front. It appears the steady stream of investments has begun to pay off handsomely for the company. Net e-commerce sales increased 63% and 60% during the first and second quarters of the current fiscal.
Walmart is continuously improving its e-commerce operations by adding multiple delivery methods, simplifying the shipping process, expanding inventory and buying more brands.
During the second-quarter earnings call, CEO Doug McMillan said:
“We’re testing associate delivery of Walmart.com orders in a few stores and by the end of the year, we’ll have approximately 100 automated pickup towers in stores across the U.S., where customers can pick up their orders within a matter of minutes. With Easy Reorder on Walmart.com, a customer has visibility to their past in-store and online purchases.”
The retailer did well on the international front as well, with nine of the 11 markets it operates in posting positive comparable store sales. Five markets grew comps by more than 5%. Sam’s Club also posted comps growth of 1.4% during the second quarter, down slightly from the 3% growth it posted in the first quarter.
Simply put, Walmart has fired on all cylinders in the last six months. U.S. sales are now on a steady growth path, Sam’s Club has found its way to growth, international operations are doing reasonably well and e-commerce continues to grow at double-digit rates. With nearly half a trillion dollars in annual revenue, Walmart is slowly proving its size is not its enemy but a friend. The bad news is if Walmart continues to expand on one side, with Amazon continuing its growth on the other, it leaves very little room for other players to effectivley compete.
Disclosure: I have no positions in the stock mentioned above, and no intention to initiate a position in the next 72 hours.
