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STOCKS SHED GAINS, TESLA SURGES DAY AFTER EARNINGS

Tesla shares jump after EV maker vows to speed up launch of more affordable models

E-Commerce Sales Hit a Speed Bump for Walmart and Target in 3Q16

Phalguni Soni

Walmart’s and Target’s Fiscal 3Q16 Performance, Earnings, Outlook

(Continued from Prior Part)

Web sales growth disappoints

While e-commerce sales for Walmart (WMT) and Target (TGT) outpaced their respective overall company growth rates, they came in below expectations in fiscal 3Q16. Walmart reported e-commerce sales growth of 10% in constant-currency terms in fiscal 3Q16. The growth rate was below the mid-to-high teens growth rate projected for fiscal 2016.

The retailer’s (XRT) ongoing challenges in three of its top five overseas markets of Brazil, the United Kingdom, and China were mainly responsible, according to Doug McMillan, president and CEO (chief executive officer) of Walmart.

Target misses e-commerce sales guidance

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Target (TGT) reported a 20% rise in online sales, below the 30% growth rate projected at the fiscal 2Q16 earnings call. The company cited slower sales in electronics and apparel as impacting performance, with overall electronics sales registering a double-digit comps (comparables) decline versus last year. However, the exception was wearables, which saw almost a 100% increase in sales comps.

Best Buy (BBY), which declared fiscal 3Q16 results on November 19, 2015, missed consensus sales estimates, citing a slowdown in electronics sales. According to BBY’s earnings release citing the NPD Group’s Weekly Tracking Service, sales in the consumer electronics industry declined 4.3% in the 13 weeks ended October 31, 2015, compared to the 13 weeks ended November 1, 2014.

Costco (COST) reported e-commerce sales slightly below $3.5 billion in fiscal 2015, an increase of just over 20% compared to the previous year. Fourth quarter sales rose 20%. Costco operates e-commerce sites in the United States, Mexico, the United Kingdom, and China. It also has a tie-in with Alibaba’s (BABA) Tmall.

Walmart, Target, and Costco together make up ~3% of the portfolio holdings of the SPDR S&P Retail ETF (XRT) and 1.1% of the Vanguard S&P 500 ETF (VOO).

Continue to Next Part

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