Walmart turned in a rare earnings miss on Thursday despite continued gains in its e-commerce business. The world's largest retailer said its fourth quarter US e-commerce sales increased 69% while same-store sales increased 8.6%. The increase was led by Walmart's online grocery business, where pickup and delivery services experienced high sales volumes.
Nonetheless, Walmart reported a net loss of $2.09 billion, or 74 cents per share, compared with earnings of $4.14 billion, or $1.45 share, a year earlier. Non-GAAP earnings were $1.39 per share on revenue of $152.1 billion.
Wall Street was looking for earnings of $1.51 per share on revenue of $148.5 billion. Shares of Walmart were down over 5% in early trading.
Throughout the pandemic, Walmart has leveraged its scale and supply chain to ramp up e-commerce operations and rapidly expand its food business. Walmart's online grocery and e-commerce strategy relies heavily on the chain's enormous physical footprint, as well as recent revenue-driving additions, such as the launch of Walmart+ and fuel perks for customers.
But the big-box retailer has had to spend more to run its business throughout the Covid-19 pandemic, with operating costs climbing more than 20%. Walmart said it had $1.1 billion in pandemic-related costs in the fourth quarter.
Walmart CEO Doug McMillon said that the company is ramping up investments to keep pace with the rapidly changing retail environment, including raising the hourly wage for US employees to above $15 per hour. Walmart said it will also invest around $14 billion this year on supply chain and automation improvements.
"Change in retail accelerated in 2020," said McMillon. "The capabilities we've built in previous years put us ahead, and we're going to stay ahead. Our business is strong, and we're making it even stronger with targeted investments to accelerate growth, including raises for 425,000 associates in frontline roles driving the customer experience. This is a time to be even more aggressive because of the opportunity we see in front of us. The strategy, team and capabilities are in place. We have momentum with customers, and our financial position is strong."