Walmart’s stock suffered its biggest loss in a single day, in terms of percentage points, in more than 30 years, on Tuesday.
The retail giant’s share price fell by 10.2 percent, down from $104.78 to $94.11, at the close of trading.
This comes after the store reported a massive dip in its fourth-quarter earnings to close out 2017, due to slower growth than the company expected as it attempts to compete in the internet sales arena.
Walmart made gains in the fourth quarter when it comes to comparable in-store sales in the US, but quarterly earnings plummeted by 42.1 percent to $2.2 billion, overall.
This was explained by investments to keep prices low and by the effects of online sales of lower-margin items, chief financial officer Brett Biggs said, according to Yahoo.
Walmart’s stock suffered its biggest loss in a single day, in terms of percentage points, in more than 30 years, on Tuesday, as its share price fell by 10.2 percent, down from $104.78 to $94.11
Even with sales of lower-margin items online, Walmart saw much less e-commerce growth in Q4 than it did in the third quarter.
US Walmart’s saw e-commerce sales grow by 23 percent in the fourth quarter, but that’s less impressive knowing Q3 showed 50 percent growth in internet sales.
However, chief executive Dough McMillon is undeterred by this data.
‘We’re confident in our strategy to transform the company,’ McMillon said to analysts, while on a 60-minute conference call. ‘It’s really about providing more convenience to customers.’
Walmart’s chief executive Dough McMillon is undeterred by the company’s disappointing fourth quarter data; McMillon is seen here speaking at the 2017 ESSENCE Festival presented by Coca-Cola at Ernest N. Morial Convention Center on June 30 in New Orleans, Louisiana
The company expects its e-commerce growth rate to jump up by about 40 percent in 2018, which it hopes will help it compete with the likes of Amazon and others; People are seen here standing outside an Amazon Go store on January 22 in Seattle
The company expects its e-commerce growth rate to jump up by about 40 percent in 2018, which it hopes will help it compete with the likes of Amazon and others.
In its efforts to hold its own online, Walmart has acquired Jet.com, and other smaller entities, like the men’s line, Bonobos.
Walmart’s e-commerce growth slowdown was due, in part, to the cost of acquiring the Jet.com business, McMillion said, and also ‘operational challenges,’ such as holiday inventory management issues.
Neil Saunders, managing director of GlobalData Retail, said he was ‘not overly concerned’ with the slowdown. Instead, Saunders praised Walmart for thinking ahead, and investing in the future in order to better its position for the long-term against Amazon, one of its biggest competitors.
Neil Saunders, managing director of GlobalData Retail, said he was ‘not overly concerned’ with the slowdown, but instead praised Walmart for thinking ahead, and investing in the future in order to better its position for the long-term against Amazon, one of its biggest competitors
‘There are many demographics, especially younger and professional segments, for whom Walmart is not the destination of choice online,’ Saunders said. ‘This is a tough nut for Walmart to crack, and one that it can only break by more heavily marketing its services and proposition.’
Saunders added: ‘Walmart needs to invest in evolving and adapting. If it doesn’t, it will become irrelevant. In so doing, it is following the same strategy as Amazon: taking less profit today, for the prospect of a stronger, better business tomorrow.’
However, a note from JPMorgan Chase called the retailer’s fourth quarter reportings disappointing in light of the ‘ecommerce narrative around the stock.’
But Walmart wasn’t alone, in making a poor showing, across the indexes on Tuesday.
In its efforts to hold its own online, Walmart has acquired Jet.com, and other smaller entities, like the men’s line, Bonobos
The market saw the end of a six-day winning streak for investors, as losses deepened in the last hour of trading.
A broad sell-off late in the day erased early gains led by technology companies.
Grocery store operators, retailers, health care companies and industrial stocks accounted for much of the market’s slide.
The Standard & Poor’s 500 index fell 15.96 points, or 0.6 percent, to 2,716.26. The Dow Jones industrial average slid 254.63 points, or 1 percent, to 24,964.75. The Nasdaq lost 5.16 points, or 0.1 percent, to 7,234.31. The Russell 2000 index of smaller-company stocks gave up 13.56 points, or 0.9 percent, to 1,529.99.
‘Investors have been lulled into a false sense that stock markets are not volatile,’ said Doug Cote, chief market strategist for Voya Investment Management.
‘Last week was one of the best weeks in years, and as we go back to normal volatility, you’re going to see what you would expect: normal ups and downs.’
The S&P 500, a benchmark for many index funds, capped its strongest week in five years on Friday, recovering more than half of the losses it suffered in a plunge at the beginning of this month.
Stocks began giving back some of those gains early on Tuesday as trading reopened after a long holiday weekend and investors began sizing up company earnings while keeping an eye on the bond market.
The yield on the 10-year Treasury, which is used as a benchmark for mortgages and other loans, has been rising in recent months from a low of 2.04 percent in September.
Higher bond yields indicate investors expect more risk of inflation, and they also can threaten stock prices by making bonds more appealing versus stocks.
‘Some of the broader concerns on investors’ minds right now are looking across to the bond market and seeing the 10-year Treasury starting to approach that 3 percent level,’ said Bill Northey, vice president at US Bank Wealth Management.
Bond prices, which had been declining early on Tuesday, ended up finishing the day with little change. The yield on the 10-year Treasury held at 2.88.
‘We’re confident in our strategy to transform the company,’ McMillon said to analysts; McMillon is seen here at the 2017 ESSENCE Festival presented by Coca-Cola at Ernest N. Morial Convention Center on June 30 in New Orleans, Louisiana
Walmart’s chief financial officer Brett Biggs echoed McMillon’s statements, saying a drop in earnings from Q3 to Q4 was explained by investments to keep prices low and by the effects of online sales of lower-margin items
Walmart posted the biggest loss in the Dow and S&P 500, down by $10.67 per share in its worst single-day drop since January 1988.
Several other big retailers also fell, including Target, which slid $2.22, or 3 percent, to $72.86. Ross Stores dropped $2.19, or 2.7 percent, to $77.98.
Gap declined 5 percent after the clothing chain said the head of the Gap brand will leave the company. Jeff Kirwan, who has been with the company since 2004, had led the namesake brand since the end of 2014.
The Gap said Kirwan had failed to achieve ‘the operational excellence and accelerated profit growth’ that the company expected for the Gap brand. The stock lost $1.66 to come in at a final valuation of $31.61.
Genuine Parts gave up 5.2 percent after the auto and industrial parts company gave a disappointing profit forecast for 2018. The stock fell $5.16 to $94.67.
Company deals offset some of the market slide.
Walmart posted the biggest loss in the Dow and S&P 500, down by $10.67 per share in its worst single-day drop since January 1988.