What’s Going On Here?Last year’s holiday season is the gift that keeps on taking: Walmart announced worse-than-expected results on Tuesday, and – like other retail giants before it – those pesky Christmas sales were to blame. What Does This Mean?Both Walmart’s revenue and profit fell short of investors’ expectations in the last quarter of 2019. As for why, take your pick: Walmart said it was down to a shorter shopping period between Thanksgiving and Christmas, the lack of big video game releases, and the unfashionable clothes it was selling. But whatever the reason, same-store US sales were up just 1.9% compared to 2018 – their slowest growth in over two years.
Still, the retail giant is seeing some brisk growth in its online business. Ecommerce sales were up 35% from the year before, partly because shoppers are ordering more of their groceries. But investors shouldn’t be too hopeful: Walmart only expects online sales to rise 30% this year, which would bring its profit in below current forecasts. Why Should I Care?For markets: 420 store-friendly.
Walmart’s disappointing forecast didn’t even address investors’ new fear: the coronavirus. The company said it’s too early to forecast how the epidemic might impact its 420 Chinese stores, but it did admit their opening hours have been reduced. That could be the least of its worries: with supply chains constricted across China, it might not even be able to offer consumers what they need.
The bigger picture: Samsmug.
Walmart might be keeping quiet, but one company had no qualms sharing its coronavirus woes with investors. On Monday, Apple warned factories have been slow in getting back to business, and that next quarter’s revenue would miss forecasts as a result. The tech giant’s manufacturing is concentrated in China, making it particularly vulnerable to the virus. Rival Samsung, meanwhile, has factories across Asia – and is set to remain relatively unscathed. You heard it here first, kids: companies, much like investors, could reduce their risk just by diversifying. | 