Walmart is investing heavily in its online operations and upgrading thousands of stores in an attempt to compete with Amazon, and second-quarter results show the initiatives continue to have early payoffs.
On Thursday, the world’s largest retailer topped earnings estimates, reporting profits of $3.61 billion – or adjust to $1.27 per share — and revenue of $130 billion. Meanwhile, same-store sales grew 2.8 percent in the quarter as online sales increased 37 percent.
“We’re experimenting with emerging technologies to improve store operations and reduce friction in our customers’ lives. The initiatives we have underway provide extended access to our brand and position the company to earn a greater share of our customers’ wallet over time,” CEO Doug McMillon wrote in prepared comments.
Despite lingering tensions over increase tariffs on China slated to go into effect on Sept. 1, Walmart also raised its full-year earnings outlook. The company now expects profits to increase for the full fiscal year 2019, with same-store sales expected to rise as much as 3 percent.
But while Walmart has worked quickly to scale up its e-commerce operations, it has reportedly come at immense losses. The Bentonville, Arkansas-based firm is projected to lose $1 billion on the initiative in 2019, according to Vox. Walmart does not provide a detailed breakout of its finances.
To compete with Amazon, the company is launching a slew of new services, including new InHome Delivery, an offering under which Walmart associates will deliver groceries directly into a person’s home.
The firm also recently launched next-day delivery and has already reached its goal of reaching 75 percent of the U.S. population, according to McMillon.
And as part of the $11 billion effort to renovate over 5,000 brick-and-mortar locations, Walmart is rolling out new autonomous services to help associates with tasks like cleaning and restocking. The company is also investing in improving its in-store pickup service for groceries and other products.
The investments in physical stores alongside the buildout of the digital operations are viewed as critical, given that 90 percent of Americans live within 10 miles of a Walmart location. Continue reading