U.S.: Investors unsure of Walmart's e-commerce profitability
Investors and analysts are watching Walmart for indications that it could turn its e-commerce into profitable business, reports CNBC. Since the retail giant saw a record-breaking quarter in 2019 for online sales - with a rise of 41% - it projects that its sales could rise 35% for this year.
A massive driving force for this jump in sales has to do with online grocery orders, something the chain advertised in this year's Super Bowl.
However, the company is struggling to turn a profit on its e-commerce front after it experienced some pitfalls. It's e-retail business lost US$2 billion in 2019 - a number higher than the retailer expected for the second year in a row.
This has sparked the interest of investors and market analysts who say that the impact of online sales could
As they anticipate the announcement of the chain's fourth quarter earnings this Tuesday, those with stake in the retailer are anxious to know if losses have peaked or if they will continue to rise. Currently, experts expect that Walmart earns a 11.4% increase in revenue from the previous quarter.
That being said, analysts are mixed on whether the company's e-commerce losses will decline or increase this year.
Walmart's online sales grow alongside its figures for e-commerce losses, said the report. So, the company must really start turning a profit for its e-commerce if it wants to be competitive.
"They've put themselves in a great position to fight Amazon in the online world, but now they need to show less of a profitability drag from that initiative," it quoted senior retail analyst for Nomura Instinet Michael Baker saying Monday.
Some investors say that losses could be up about US$1.9 billion from 2019 (Morgan Stanley) while others say that the initial investment Walmart made on e-commerce is what caused such huge losses in the past and now that the retailer is familiar with the business, they may have fewer losses.
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