Wal-Mart Surprises With Online Sales Strength

Wal-Mart (NYSE:WMT) e-commerce numbers increased dramatically over the same quarter last year, according to its earnings report released Thursday. Its online sales rose a staggering 63 percent and added 0.8 percentage points to its first-quarter same-store sales gain. Wal-Mart provides only a growth figure for its online business, and does not specify revenue.

Wal-Mart executives credited an expanded online assortment for helping to lure in more repeat customers willing to spend more money. Wal-Mart now offers 50 million items through its website, up from 35 million in the last quarter and 10 million in the same quarter of last year. Walmart.com’s free two-day shipping offering and higher repeat orders helped drive the results.

Wal-Mart is aggressively pursuing deals for online stores. The company paid $3.3 billion for e-commerce retailer Jet.com last year, completing its purchase in September. Wal-Mart also spent money on smaller digital acquisitions, including women’s clothing retailer ModCloth and outdoor apparel site Moosejaw. There is also the rumored pending acquisition of Bonobos, a NY-based men’s retailer.

The acquisitions gave the company a one-time bump in sales. Overall sales rose 1.4 percent, to $117.5 billion, in the latest quarter compared with a year ago. Comparable-store sales rose 1.5 percent. This represents the eleventh straight quarter of positive comparable sales and ten straight quarters of traffic increases.

Wal-Mart’s latest strategy was put in place by its current chief executive, Doug McMillon. The company has also been investing in training its in-store associates and revamping its grocery business. The company continues to seek ways to better leverage its huge physical warehouses and distribution centers to provide products to customers across the country quickly.

Wal-Mart is also relying more on automation, reducing labor costs. At many stores, customers can make their purchases through self-checkouts. The company has also started testing drones to manage inventory at its enormous warehouses. Wal-Mart received a patent in March for drones that could transport products between departments in stores.

Wal-Mart’s grocery business saw its food categories deliver their strongest quarterly comparable sales performance in more than three years. Most of the comparable store growth came from food. Wal-Mart recently rolled out an “Easy Reorder” feature to help shoppers restock foods or other items they buy frequently easily.

Wal-Mart is raising its guidance for the second quarter. The company now predicts that comparable sales will improve 2 percent for the second quarter. Wal-Mart shares hit a 52-week high Thursday after the release of the retailer’s quarterly financial report.