A boost in US holiday sales helped retail behemoth Walmart Inc’s profits surge at the end of last year, but store executives on Tuesday acknowledged that they have not yet solved the profitability riddle for the fast-growing online business.
The world’s biggest retailer, which has been investing aggressively to adapt its US stores to the digital era by adding more in-store pickup and delivery of smartphone orders, reported profits of US$3.7 billion in the three months ending on Jan. 31, up nearly 70 percent from the same period a year earlier.
Total revenues increased a more modest 1.9 percent to US$138.8 billion, the company said.
Higher comparable sales at Walmart’s namesake US stores — the source of two-thirds of revenues — offset declining sales at Walmart International and Sam’s Club stores.
Executives touted gains in market share over the holiday season in toys and groceries.
The company scored a 43 percent jump in e-commerce sales, its latest increase following acquisitions of smaller digitally oriented retail companies, and revamping its operations with new smartphone application features and customer offerings.
Often seen as a rival to Amazon.com Inc in the retail big leagues, Walmart offers grocery pickup at more than 2,100 of its 4,755 US stores and delivery at nearly 800 locations.
However, traditional brick-and-mortar retailers have struggled to attain the same level of profitability on digital sales compared with their legacy businesses, in part because customers increasingly demand delivery of goods at no extra charge.
Walmart’s approach has been to “be there when where and how” customers want, as chief executive Doug McMillon put it in a news release.
That strategy has boosted sales, but is not yet profitable. The company has signaled that it expects losses in its e-commerce business to grow over the next year, due to spending on same-day grocery delivery and technology.
“It’s loud and clear to us that the customer is really busy so if we can find ways to make things more convenient for them with delivery and pickup, they’re all over it,” McMillon told analysts.
The company’s grocery services had expanded its customer base, but the biggest challenge was to improve the “merchandise assortment” of the digital orders with more high-margin products in addition to staples that have tight profit margins, he said.
Walmart is exploring other innovations, such as a crowdsourced grocery delivery pilot program.
The system could ultimately evolve to one where Walmart delivers groceries within a window of time, McMillon said.
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure