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02/18/2021

Walmart sales still up, but a cooling may be on the way

The big-box retailer is increasing its spend to meet demand for online shopping in a COVID-19 era

Walmart Inc. reported a mixed performance Thursday for the fourth quarter.

It swung to a loss partly due to costs related to the pandemic, and the sale of its Japan and U.K. divisions. But sales surged by 7.4% in the period that includes the critical holiday shopping season. Sales at stores opened at least a year rose 8.6%, up from 6.4% in the previous quarter.

While online sales surged 69%, that is down from an 80% spike in the prior period and it was the slowest growth since the pandemic began. The company also said it expects overall sales to moderate this year.

Walmart has pushed hard into fast and convenient delivery during the pandemic. But even the massive infrastructure put into place by Walmart in recent years were strained by the crush of orders from millions of people sheltering at home.

That means yet more spending to accommodate shoppers growing increasingly accustomed to shopping from home. The company announced plans this year to build warehouses at stores where self-driving robots will fetch groceries to be picked up within an hour or less by customers. And that was before Thursday's announcement that it was bumping related spending by $14 billion.

"Change in retail accelerated in 2020," said CEO Doug 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."

Walmart said Thursday that it's raising its average hourly wage in the U.S., concentrating on online and stocking roles. Starting March 13, pay for workers in those jobs will increase to between $13 and $19 an hour, based on a store's location.

Walmart Inc. lost $2.09 billion, compared with last year's $4.14 billion profit during the fourth quarter. Rolled into those numbers is a $1.1 billion hit from costs related to the pandemic.

Walmart International net sales were $34.9 billion, an increase of 5.5%. Net sales, in constant currency, increased 6.3%, led by Flipkart, Mexico and Canada. Changes in currency rates negatively affected net sales by approximately $0.3 billion.

Walmart announced late last year it would sell off 85% of its Japanese supermarket subsidiary Seiyu in a deal valued at 172.5 billion yen ($1.6 billion). That came a month after it sold its British supermarket chain Asda for 6.8 billion pounds ($8.8 billion), though it maintains a minority stake.

Net revenue reached $150.98 billion, better than industry analyst projections of $148.5 billion, and easily outpaced last year's $140.6 billion fourth-quarter revenue.