NEW YORK, Feb 18 — American retail giant Walmart did not have a merry Christmas as disappointing toy and clothing sales hit the chain’s bottom line, the company announced today.
Massive social unrest in Chile also undermined earnings, but the company has not yet been able to estimate the financial impact of the new coronavirus epidemic in China, where it has a large supply chain.
In Chile, “unrest led to disruption in the majority of our stores which... negatively affected operating income by approximately US$110 million,” the company said, adding that it “continues to monitor the events” in the South American nation.
Walmart said it also is watching the coronavirus outbreak and “has not included any potential financial effects in its assumptions.”
Apple cast a shadow over markets yesterday after announcing it would not reach its sales target for the quarter due to the virus outbreak, which has shut down many key manufacturing and transportation links in China.
Walmart, which has 11,500 stores located in 27 countries, took advantage of the US trade war to re-organise its supply chain so as not to depend too much on a single country or geographic area.
But the retailer, which is a staple for low-income households, saw sales slow in the fourth quarter ended January 31.
With the consumer instrumental in sustaining US economic growth, the lacklustre Walmart results will be a source of concern to analysts and policymakers.
Global revenue increased 2.1 per cent to US$141.7 billion, below expectations for US$142.5 billion.
Mild winter
Comparable store sales in the US market, a key indicator for retailers, rose 1.9 per cent, well below the gain analysts had projected and far slower than the 3.2 jump in the prior three months.
Revenue generated from the growing online sales component jumped 35 per cent, but that was also far slower than the 41 per cent in the third quarter, despite several promotional operations, such as “Cyber Monday.”
Walmart, which also operates the Sam’s Club wholesale stores, is fighting to catch up with e-commerce behemoth Amazon.
While the quarter started strong, “In the few weeks before Christmas, we experienced some softness in a few general merchandise categories in our US stores,” Walmart Chief Financial Officer Brett Biggs said in a statement.
“We understand the factors that affected our results and are developing plans to address them.”
Some analysts already had warned that mild winter weather in the US could have negative consequences for retailers, as was the case for Target, the main rival of Walmart.
With the disappointing results, Walmart posted earnings per share of US$1.38 compared to the expected US$1.43.
For the coming year, it expects to achieve US$5 to US$5.15 a share. — AFP
