May 17, 2018
By:
Laura Kennedy
Walmart reported solid U.S. results for Q1 2018, posting comps of 2.1% and growth of 3.1%, to hit sales of USD77.7 billion. Here are a few quick takeaways from this morning’s announcement:
- Comps growth was relatively strong. Following several quarters of sub-2% comps growth (save for Q3-Q4 2017, which got a boost from hurricane-driven spending and a strong holiday season industrywide, respectively), Walmart posted U.S. comps of more than 2%, which the retailer says may have been even stronger if not for unseasonably cool weather in April (an explanation we expect to hear from many retailers this earnings season).
- And eCommerce was a significant driver. Even more notable than the overall comps number, though, was the fact that eCommerce contributed to nearly half the growth (100 basis points). Following an especially weak Q4, eCommerce sales growth of 33% in Q1 marks a return to the higher growth rates that Walmart forecasts for 2018 (approximately 40%). This increase could mean the retailer is addressing the “operational challenges” it faced with such eCommerce fundamentals as fulfillment during the holiday season. eCommerce’s significance this quarter also tracks with our latest forecast updates, which foresee at least half, if not more, of Walmart’s growth into the next decade coming from online sales — particularly powered by Online Grocery Pickup expansion.
- Comp ticket growth was also the strongest in at least two years. Walmart CEO Doug McMillon specifically called out the retailer’s 0.8% traffic growth, but Q1’s ticket growth of 1.3% notably maintained the strength it built up over the last few quarters. This is a positive sign: Given Walmart’s plans to open fewer than 15 Supercenters in 2018, driving comps via more people, more trips, and bigger baskets will be crucial to the retailer’s growth in 2018 and beyond.
Keep an eye on KRiQ.com for our expanded analysis of Walmart’s Q1. And for more on the recent shifts in Walmart’s International business, check out our thoughts here.
For more information, please contact:
Laura Kennedy, Vice President
laura.kennedy@kantarconsulting.com