Investors had high hopes for the overall results of Walmart (NYSE:WMT) during the company's important holiday quarter. The biggest ongoing question, however, was whether the company could continue to expand its online sales as the world increasingly turns to e-commerce. The answer to that question was a resounding yes.

For the fiscal 2019 fourth quarter (which ended Jan. 25, 2019), Walmart showed it was more than up to the task, growing its U.S. digital sales by 43% year over year. For the full year, online sales in the U.S. increased by 40%.

A Walmart customer smiling while looking at a smartphone and pushing a shopping cart.

Image source: Walmart.

Strong overall results

Walmart grew revenue to $138.8 billion, up 1.9% year over year, or up 3.1% in constant currency. The retailer delivered operating income of $6.07 billion, up 36% compared with the prior-year quarter. Even more impressive was the company's earnings per diluted share of $1.27, up 74% year over year. On an adjusted basis, which excludes the impact of tax reform and the unrealized gains and losses from its stake in JD.com (NASDAQ:JD), earnings per share of $1.41 increased 6% versus the prior-year quarter. 

The results were boosted by solid gains in comparable store sales. For the fourth quarter, comps grew by 4.2% year over year. This was driven by ticket growth of 3.3% and foot traffic that increased by 0.9%. On a two-year stack basis (which is achieved by adding together the past two years of comp growth), comp sales were up 6.8%, the best results in nine years. Comps at Sam's Club were robust, up 3.3%, while its e-commerce sales grew 21%, both year over year.

Solid e-commerce traction

Walmart has been concentrating on growing its e-commerce operations in recent years, and that focus is paying off. Its digital sales continue to benefit as the company expands its grocery pickup and delivery business, which is now available at more than 2,100 and 800 locations, respectively.

Walmart plans to increase those options significantly, growing to 3,100 pickup locations and 1,600 delivery locations over the coming 12 months. The company has also converted four Sam's Club stores to e-commerce fulfillment facilities. Walmart continues to offer a broader assortment of goods at both Walmart.com and Jet.com.

It's all in the delivery

Walmart is also testing a growing number of options:

  • A collaboration with Ford to test self-driving deliveries.
  • A pilot with Udelv that will provide grocery delivery with autonomous cargo vans.
  • Spark Delivery, a new last-mile grocery service.
  • An expanded list of grocery delivery providers.
  • Partnering with Instacart for last-mile delivery from Sam's Club.
  • Increasing its investment to $370 million in Dada-JD Daojia, a Chinese online grocery and delivery company partly owned by JD.com.
  • Delivery services or expanded options in Japan, Mexico, and Chile.

As you can see from this list, Walmart's ensuring that its e-commerce success continues by nailing the delivery -- and testing a wide variety of options to further that objective.

Check out the latest Walmart earnings call transcript.

A Walmart employee loading grocery bags into the back of a Ford car.

Image source: Walmart.

What the future may hold

Management seems enthusiastic about the year to come. The company is forecasting consolidated net sales growth of 3%, excluding the impact of Flipkart (its e-commerce company in India), the de-consolidation of Walmart Brazil, and a planned reduction in tobacco sales at Sam's Club.

In the U.S., Walmart expects comp sales to grow in a range of 2.5% to 3%, excluding fuel. The company anticipates more modest increases at Sam's Club of about 1% excluding fuel, and 3% excluding fuel and tobacco. The company is forecasting even stronger sales growth internationally, up 5% year over year in constant currency. The company continues to see a big opportunity in digital sales, and is forecasting e-commerce sales growth in the U.S. of about 35%, though down slightly from the 40% growth it produced over the past year.

As Walmart works to develop its e-commerce operation in India, it expects Flipkart will weigh on the bottom line. The company is forecasting earnings per share to increase by a low- to mid-single-digit percentage excluding Flipkart, and decline by a low-single-digit percentage year over year including Flipkart.

Walmart is also continuing its ambitious international expansion plans, and expects to open more than 300 stores in Mexico and China, compared with fewer than 10 in the U.S.

With another solid year of e-commerce gains, the company has signaled that it has cracked the code to competing in the digital sales arena. By focusing on expanding its pickup and delivery options, increasing its fulfillment warehouses, and increasing the number of items available to online shoppers, Walmart is positioning itself as a digital powerhouse for years to come.