Walmart shares fall on earnings miss, retailer sees sales growth slowing in coming year

  • Walmart's fourth-quarter earnings missed Wall Street's expectations, as it tries to turn pandemic gains into sustained momentum and higher profitability.
  • The big-box retailer's e-commerce sales in the U.S. grew by 69% and its same-store sales in the U.S. grew by 8.6%.
  • Walmart CEO Doug McMillon said it will boost the wage of U.S. workers, raising the average for hourly employees to above $15 per hour. 

Walmart's fourth-quarter earnings felt short of Wall Street's expectations on Thursday, as the retailer aims to turn the strength of its e-commerce business during the pandemic into lasting momentum and higher profits.

Shares are down nearly 5% in premarket trading.

The discounter's e-commerce sales in the U.S. grew by 69% — a large number, but the slowest growth rate since the start of the global health crisis. Same-store sales in the U.S. grew by 8.6%, higher than the increase of 5.8% expected by a StreetAccount survey. Its subsidiary, Sam's Club, also reported low single-digit same-store sales growth, excluding fuel and tobacco.

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Walmart, however, cautioned that it expects sales to moderate this year. It said earnings per share will decline slightly, but be flat to higher after excluding divestitures. The company's tailwinds from pandemic trends may also fade, as more Americans get Covid-19 vaccines and spend their budget in other ways, such as going out to dinner or filling up the gas tank on a commute back to the office.

Walmart CEO Doug McMillon said that the company has stepped up investments to keep up with the significant ways that retail has changed over the past year. He said it will also boost the wage of U.S. workers, raising the average for hourly employees to above $15 per hour. 

"This is a time to be even more aggressive because of the opportunity we see in front of us," he said in a news release. "The strategy, team and capabilities are in place. We have momentum with customers, and our financial position is strong."

Walmart swung to a loss of $2.09 billion, or 74 cents per share, from earnings of  $4.14 billion, or $1.45 share, a year earlier. The company said a loss on its U.K. and Japanese operations reduced earnings by $2.66 per share, which was partially offset by a gain of 49 cents per share on equity investments.

Excluding these and other items, Walmart earned $1.39 per share, missing analysts estimates. 

Walmart's e-commerce business has had dramatic gains, but it has not yet turned a profit. The company's Chief Financial Officer Brett Biggs told CNBC that its e-commerce margins continue to improve, however.

He said Walmart plans to spend $14 billion on capital expenditures this fiscal year, up from a rate of $10 billion to $11 billion as it invests in supply chain, automation and ways to improve the customer experience.

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Total revenue grew by 7.3% to $152.1 billion from $141.67 billion a year earlier, topping Wall Street's expectations of $148.30 billion.

Its membership warehouse club, Sam's Club, reported same-store sales grew by 8.5% excluding fuel and tobacco. The membership warehouse club's e-commerce sales jumped by 42%.

Walmart is raising its dividend by a penny to 55 cents per share and approved a $20 billion stock buyback program.

This story is developing and will be updated.

Read the full press release here.

—CNBC's Courtney Reagan contributed to this report.

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