Walmart expects surge in online sales as its digital strategy ramps up

The retail giant told investors Tuesday that it will continue to shift resources into building up its ecommerce business and digital technology stack.
Written by Natalie Gagliordi, Contributor

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Walmart on Tuesday said it expects its US ecommerce business to grow sales by roughly 40 percent in the upcoming fiscal year.

The world's largest retailer is holding it annual investment community meeting in Bentonville, Ark., where executives also outlined plans to reduce the number of new store openings and shift more resources into building up its ecommerce business and digital technology stack.

"We have a plan that plays to our unique strengths," said Walmart CEO Doug McMillon, citing the company's massive brick-and-mortar footprint. "We are well positioned to win the future of retail and I wouldn't trade places with anyone."

McMillon reiterated Walmart's digitally focused growth strategy, which includes an aggressive push into online grocery and increased capital spending on digital supply chain capabilities and in-store technology.

McMillon said Walmart's ecommerce business will continue to incorporate Jet.com's basket economics strategy, which stresses logistics and supply chain to reduce costs. In terms of online and last mile delivery, McMillon said the gig economy and store associates will play a significant role going forward.

Marc Lore, president and CEO of Walmart's US ecommerce business, offered more insight into Walmart's long-tail online strategy, which includes offering unmatched prices, assortment and experiences. Lore also touted Walmart's prospects for accomplishing same-day and two-hour delivery.

"Walmart has a set of assets that can't be matched anywhere," Lore said, referring to Walmart's network of physical stores, which now also function in a warehouse capacity.

"That's what Walmart has, 4,600 sort of warehouses where product is getting there in full truck load quantities," Lore said. "You really can't get a lower cost to serve than that -- and these warehouses, they're profitable. That's where the real power of the 'omni' comes together."

Looking at financials, Walmart still expects adjusted earnings for fiscal 2018 to be between $4.30 and $4.40 per share. Wal-Mart Stores, the parent company of Walmart and Sam's Club, expects earnings to increase about 5 percent year over year for fiscal 2019. The retailer expects 2019 net sales to grow close to 3 percent, driven by same-store and ecommerce sales growth.


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