Walmart Hails In-Store Shopping Gains as E-Commerce Growth Slows

Walmart executives touted in-store shopping, its “modernizing” fulfillment operations and growing advertising business, on a Tuesday earnings call. Revenue grew 2.4% to $141 billion for the quarter ended July 31 on a 2.2% bump in sales to $139.9 billion. Comparable sales grew 5.2%, it said. Average ticket slipped 0.8% vs. growth of 27% in the year-ago quarter.

By operating segment, Walmart U.S. sales grew 5.3% to $98 billion, and Sam’s Club sales jumped 13.9% to $18.6 billion; international sales dropped 15.2% to $23 billion, due to divestitures. At Sam's Clubs, TVs “performed well” but were more than offset by lower mobile phone sales, it said.

The retailer honed FY 2022 guidance, projecting 6%-7% growth, more than $30 billion, vs. May guidance of a low-to-mid single-digit sales increase. Q3 sales are “solid” on back-to-school shopping, said Chief Financial Official Brett Biggs.

E-commerce sales slowed to 6% in the quarter vs. 103% over the past two years, said Biggs. Walmart is on track to deliver $75 billion in global e-commerce this year, and $100 billion “near term.” It expects to make “hundreds of thousands” more products available via e-commerce for its fulfillment services, Biggs said.

The discount retailer is seeing more cost inflation than normal, said Biggs. Its merchants are working with suppliers and monitoring price gaps “to keep prices low while managing margins,” he said. Inventory improved by 20% vs. COVID-19-related shortages from a year ago, Biggs said.

CEO Doug McMillon reinforced the company’s omnichannel strategy giving consumers the choice how and where they want to shop: in stores, via store pickup or delivery. Customer behavior changed in Q2, with more in-store than online shopping, he noted.

The biggest imperatives for Walmart are speed and innovation, said McMillon. Purpose and values “are constant, but everything else is open to change,” he said.” The retailer is becoming more digital and learning how to work differently, he said. The company has launched and scaled new businesses, “and a year from now we’re going to be doing the same thing,” he said, saying his goal is to raise the speed, innovation and productivity of the company.

Walmart U.S. CEO John Furner said the retailer is “learning very quickly” how to use its local, upstream and distribution supply chain assets “very dynamically to be able to move product and assemble orders in a way that is most efficient.” Market fulfillment centers help with local capacity and to “keep orders consolidated” through the retailer’s last-mile network, he said.