Online sales fuel positive results at Walmart and Alibaba while L Brands struggles with a brand overhaul.
Walmart Shows Solid Performance on E-commerce Spike
Walmart reported positive performance in stores and online. The big-box retailer reported revenue of $117.5 billion, a 1.4 percent increase for the first quarter of 2018, ended April 28th.
“We delivered a solid first quarter and we’re encouraged by the start to the year. We’re moving faster to combine our digital and physical assets to make shopping simple and easy for customers,” CEO and President of Walmart Stores Doug McMillon said in a statement
Net sales for Walmart U.S. reached $75.4 billion from $73.3 billion in FY 2017, a 2.9 percent increase. Comparable store sales increased by 1.4 percent with traffic up by 1.5 percent in Walmart U.S. stores. As other retailers have noted, Walmart said first quarter results were hampered at first by a delay in federal tax refunds.
E-commerce sales increased by 63 percent in the quarter, which reflects Jet.com and all of Walmart’s businesses.
On the earnings call, McMillon noted that while the company has made acquisitions of online players like the recent purchases of Modcoth and Moosejaw, “our plan in e-commerce is not to buy our way to success. The majority of our growth is and will be organic. The acquisitions are helping us speed some things up.”
The company continues to look for ways to boost online sales as well as tie online to offline, as with its free 2-day shipping on orders of $35 or more and its discounts on online-only item picked up in store.
It’s also focused on creating a better customer experience in store with apps that allow shoppers to skip pharmacy lines, technology that allows salespeople to employ handheld devices, and scan and go features at Sam’s Club.
Sam’s Club comp sales were up 1.6 percent in the quarter, and net sales totaled $14.0 billion, up 2.8 percent from $13.6 during the previous year period. And seven of 11 international markets had positive comps for Walmart International. Net sales for Walmart International totaled $27.1 billion, down 3.5 percent from $28.1 billion during the same period of FY17.
Looking ahead, the company set second quarter guidance at $1.00 to $1.08 earnings per share and comparable store results for Walmart U.S. between 1.5 and 2.0 percent. For Sam’s Club, the quarterly comp store guidance falls between 1.0 and 1.5 percent.
L Brands Weathering Victoria’s Secret Turnaround Woes
L Brands, which operates Victoria’s Secret, Bath & Body Works and Henri Bendel, reported a decrease in net sales and operating income for the first quarter ended April 29th.
Net sales dropped 7 percent to $2.4 billion from $2.6 billion during the previous year period. Comparable store sales were down 9 percent, hurt by the exit in swim and apparel at Victoria’s Secret. Overall, Bath & Body Works performed well with positive comps. The retailer reported a continuing strength in its home fragrance business and an expected uptick in body care.
Net income decreased to $94.1 million from $152.3 million during the same quarter last year. Earnings per share for the quarter were 33 cents compared to 52 cents last year. The results reflect the turnaround efforts at Victoria’s Secret, which included streamlining the merchandise and discontinuing the brand’s catalogs.
L Brands plans to continue growing its global footprint.
The company increased its guidance for the full year to $3.10 to $3.40 from $3.05 to $3.35. The company expects earnings per share for the second quarter to be between 40 cents and 45 cents on a better merchandise margin rate.
Alibaba Revenue Soars on Online Sales
Alibaba reported a 60 percent revenue spike for the quarter ended March 31st. Total revenue reached 38.6 billion RMB ($5.6 billion), while revenue from its core commerce business increased by 47 percent to 31.6 billion RMB ($4.6 billion). The balance of the revenue came from its cloud computing, digital media and entertainment, and innovation initiatives.
“We reported another excellent quarter, with revenue growth accelerating to 60%, the highest growth rate we’ve achieved since our IPO. We also reported very strong fiscal year revenue growth of 56% with annual non-GAAP free cash flow of approximately US$10 billion,” said Maggie Wu, chief financial officer of Alibaba Group. “Our robust results demonstrate the strength of our core businesses, as well as the positive momentum of our emerging businesses, including cloud computing, where we continue to see strong growth and market leadership.”
Net income reached 9.9 billion RMB ($1.4 billion). Diluted earnings per share were 4.12 RMB (60 cents).
Revenue was up 56 percent for the full year to 158.3 billion RMB ($23 billion).
Net income for the full year hit 41.2 billion RMB ($6 billion) with diluted earnings per share of 16.9 RMB ($2.5).
The e-commerce giant boasts 454 million annual active buyers, up 31 million from the previous year.
Taobao’s monthly active users on mobile increased by 14 million. “This strong mobile user growth reflects our efforts to establish the Taobao App as a destination platform not only for shopping, but also for sharing product knowledge and lifestyle content, which drive effective user engagement and retention,” Alibaba said in a statement.
Further, the company touts Tmall as a place for “brands to gain invaluable consumer insights for the China market for new product launches, brand-building, customer acquisition and customer lifecycle management.”
To enable sellers to better service shoppers, Alibaba has rolled out its Store Concierge service, which uses chatbots to provide customer service.
Boston Retail Partners uncovers how retailers are trying to deliver true multichannel shopping experiences to meet the consumer demands of the future.Read more
A recent report highlights how transparent, compliant supply chains benefit all aspects of apparel businesses—though only some companies can overcome inherent challenges to reap the rewards.Read more
China is bolstering its AI fleet with robust investments, domestic talent and a desire to dominate the sector in upcoming years.Read more
The Vietnam Textile and Apparel Association has appealed to the Hanoi not to impose import tariffs on polyester fiber.Read more
Though Li & Fung has been working on its new Three-Year Plan to digitize and speed up the supply chain and its evolution to agent 2.0, the business has still hit on hard times as retail wriggles out of its old skin and into a new life.Read more
Simon believes that the mall is a boon for new brands—and its latest pop-up concept could bring consumers back to brick-and-mortar.Read more
Textile Exchange, the global non-profit that promotes the adoption of preferred fibers, integrity and standards and responsible supply networks, has released its largest preferred fibers report ever in the number of participants and areas of coverage.Read more