The world’s largest retailer is forecasting that profit and capital spending will be flat next year as it boosts investment in e-commerce to better take on Amazon. Fred Katayama reports.
Profit slowdown at Wal-Mart
Profit slowdown at Wal-Mart. The world’s largest retailer says it doesn’t see earnings growing at all next year as it pours investments into e-commerce. Also expected to be flat: capital spending. The world’s largest retailer will further scale back the opening of new stores. That news released at the start of investor day Thursday sent its stock south in early trading.
Wal-Mart is speeding up its e-commerce efforts to narrow the gap with Amazon.com. It’s on track to double the number of big warehouses dedicated to online sales by year’s end. But that’s still a fourth that of Amazon’s.
Wal-Mart said it’ll depend more on sales growth from e-commerce and existing stores in the future and less from new stores.
Wal-Mart has installed automated product sorting, improved item tracking, and other new technologies in the past year that it says will allow it to ship products to a majority of the U.S. population in one day.
Kurt Salmon supply chain director Steve Osburn said, “These additions definitely give Wal-Mart the opportunity to compete better than other companies going head-to-head with Amazon. Having said that, choosing to race with Amazon is different than catching up with them.”
Amazon’s online sales are nearly 8 times greater than Wal-Mart’s online sales.