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Weaker Holiday Spending Slows Walmart’s Growth

By Demitri Kalogeropoulos – Updated Feb 18, 2020 at 11:20AM

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The retailer noted pockets of soft demand at the close of its fiscal year.

The holiday shopping period wasn't quite as cheery as Walmart (WMT 0.43%) hoped it would be. The world's biggest retailer on Tuesday announced fiscal fourth-quarter results that included a surprise growth slowdown -- but management is confident that the slump will be temporary.

A woman shops online.

Image source: Getty Images.

What happened?

Comparable-store sales rose by 1.9% for the period, marking a deceleration from the over 3% increase the chain had noted in the prior quarter. In a press release, executives noted "softness in a few general merchandise categories" leading up to Christmas. That description syncs up with what Target said earlier in the month as it lowered its own 2019 outlook.

Walmart still ended up showing strong full-year growth, with key wins including a booming e-commerce segment and solid customer traffic gains.

Looking ahead

Management says they have a good handle on what went wrong last quarter, and that understanding gave them confidence to project another strong growth year ahead. Sales should rise by "at least 2.5%" in the core U.S. market, executives said, thanks in part to another over 30% spike in digital demand. Earnings gains will be more modest, though, as the company plans to spend over $11 billion on initiatives like store remodels and a bulked up digital selling infrastructure.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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