Walmart Inc.’s (NYSE: WMT) fourth-quarter profit missed Wall Street expectations. In the quarter, Walmart posted a profit of $2.18 billion, or 73 cents a share, compared with a profit of $3.76 billion, or $1.22 a share, in the same quarter of last year. On an adjusted basis, the company reported $1.33 a share, lower than the $1.37 expected by analysts polled by Thomson Reuters.
The company said that sales rose steadily over the busy holiday shopping period. Same-store sales at Walmart’s U.S. locations rose 2.6 percent for the quarter ended Jan. 31. Sales in existing stores have risen for 14 consecutive quarters. The company reported that traffic rose 1.6 percent in the period.
The company struggled with slower e-commerce sales during the period. U.S. e-commerce sales grew 23 percent in the fourth quarter, down from 50 percent in the third quarter. The company blamed some of the slowdown on “operational challenges.” Despite the challenges, the company finished the year with more than 40 percent growth in online sales.
The company said the new U.S. tax law added $207 million to earnings in its latest quarter. Walmart is planning to use part of the money it is saving from the new tax laws on improving things for its employees. A number of U.S. corporations have announced employee bonuses and expanded benefits following the changes to the tax code.
Last month, Walmart announced it would raise starting wages for store workers to $11 an hour, add parental-leave benefits and hand out a one-time bonus to many hourly workers. The wage and bonus payments are expected to cost around $700 million up front. Analysts estimate the additional parental-leave benefits would cost around $100 million.
Walmart has drastically shifted from building more supercenters to improving existing stores and investing in e-commerce. The company is getting ready to launch an overhauled website with a focus on fashion and home furnishings. Walmart has also added hundreds of online grocery pickup locations at stores and said it would expand its grocery home delivery services.
Walmart also said it has cut overall marketing spending at Jet. Walmart bought the high-profile online store in September 2016 to target higher-income, urban shoppers. The company said it now wants to focus on acquiring new customers for its main website.
Walmart expects U.S. e-commerce sales to grow 40% in this fiscal year. The company is predicting that U.S. comparable Walmart store sales will rise 2 percent and net sales growth will be 1.5 percent to 2 percent for the current year. Walmart is currently the world’s largest retailer with over half-a-trillion dollars in annual revenue.