Walmart reported another round of strong sales Thursday amid the coronavirus pandemic as it announced significant investments on higher employee wages and technology for growing e-commerce demand.
The retail giant, which has become a one-stop shop for many consumers during the pandemic, said the new investments will bolster delivery and curbside pickup programs connected to e-commerce and lift wages for some 425,000 US workers.
Shares fell sharply on the announcements, which included a forecast for slower US sales growth and slightly lower profits in the coming year.
“Our business is strong, and we’re making it even stronger with targeted investments to accelerate growth,” said Chief Executive Doug McMillon.
“This is a time to be even more aggressive because of the opportunity we see in front of us.”
Walmart reported a fourth-quarter loss of $2.1 billion from the accounting for asset sales, compared with profits of $4.1 billion in the year-ago period.
Revenues rose 7.3 percent to $152.1 billion as the company pointed to a bounce from a strong holiday shopping season and a lift from a fresh US government stimulus package enacted at the end of 2020.
For all of 2020, Walmart reported profit of $13.5 billion, down 9.8 percent. Annual revenues jumped 6.7 percent to $524 billion.
At a presentation to Wall Street analysts, Walmart executives said they planned new investments on automation and supply chain improvements in line with a “hybrid” model of traditional and digital commerce.
“We know where the customer is going,” said McMillon, who said the spending would boost e-commerce offerings and the attractiveness of “Walmart +,” a subscription plan that includes grocery delivery and is a rival to Amazon’s “Prime” service.
Walmart projected capital spending of $14 billion in fiscal 2022 compared with $10.3 billon in the year that just ended.
The wage increases will lift Walmart’s US employee average wage to above $15 per hour. However, Walmart did not alter its national minimum wage, which is currently $11 an hour.
President Joe Biden and congressional Democrats have championed legislation to boost the US minimum wage to $15 an hour from the current $7.25 an hour.
However, the fate of the plan is uncertain. Republicans so far oppose the plan and some Democrats have balked at the size of the increase.
McMillon, in response to an analyst question, said $15 an hour was an “important target” for the company, but that wage increases should be “paced to the US economy” and take into account regional cost-of-living patterns.
Shares fell 5.0 percent to $139.81 in pre-market trading.
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