Walmart reported revenue of $152B and a loss of $2.09B for Q4 2020. The retailer's overall revenue for 2020 increased by 7% YoY to $560B, and it saw a profit of $13.5B, 9% less than the previous year. The company's share price fell by 6% on the earnings announcement.
- Walmart's U.S. sales increased by around 8% for both Q4 2020 and overall last year. Its international division grew by 5.5% in Q4 2020 but showed only a marginal improvement of 1% for the whole year.
- Its e-commerce sales grew by 69% compared to 2019. However, the division grew by more than 80% in the previous two quarters and is yet to turn a profit.
- Yesterday, the company announced that it would raise the average minimum wage for 425,000 U.S. employees to above $15 an hour (ranging between $13-$19) from above $14 an hour. Walmart is the largest private employer in the U.S. with 1.5 million workers. Notably, the Biden administration aims to increase the minimum wage from $7.25 to $15 over four years through its $1.9T stimulus package.
- Walmart attributed the majority of its Q4 loss to the non-cash loss incurred by selling its controlling stake in U.K. grocery store chain Asda and Japanese retail chain Seiyu.
- During the sale of Asda, Walmart said that the transaction would result in a $2.5B loss.
- The company also sold its Argentina operations in the last year.
- By retreating from less profitable markets, Walmart will focus on e-commerce and high-growth markets, including China, India, and the U.S, which contributes to over 75% of its revenue.
Bid to capture Gen Z audience:
Though Walmart's attempt to buy a stake in TikTok through its partnership with Oracle is unlikely to proceed, it continues to work with the app on its e-commerce growth. In December, Walmart launched a pilot test for streaming shoppable videos on TikTok, which allow users to buy products from Walmart without leaving the app.
- Walmart CFO Brett Biggs said the company plans to have a $14B capital expenditure in 2022, up from $10B last year. The investment will strengthen various parts of its value chain, including customer experience, automation, and supply chain.
- The company is no longer investing heavily in international expansion and building superstores. Investment in other parts of the supply chain is expected to reduce merchandise prices and improve delivery speed.