Wal-Mart’s first quarter margins under pressure, e-commerce rebounds
Wal-Mart Inc. on Thursday said that due to price cuts and higher freight costs, profit margins during the first quarter remained under pressure.
In the quarter that ended in April, Wal-Mart’s gross margin was down 23 basis points. Moreover, it has been falling for four consecutive quarters. From the previous year, the operating income fell 3.1 percent within the U.S. division.
After initially opening higher, Shares of the world’s biggest retailer traded 1.6 percent down in afternoon trade. The stock has fallen around 20 percent from an all-time high in January.
Unfortunately the strong first quarter results and progress in Wal-Mart’s efforts to keep pace with rivals like Amazon.com were overshadowed by weak margins.
In addition, the e-commerce sales of Wal-Mart grew 33 percent, which is above the 23 percent growth as compared to the last three months. According to Wal-Mart, it is on way to raise U.S. e-commerce sales by 40 percent for the complete year.
After a sharp slowdown during the crucial holiday quarter, the e-commerce rebound has come. Owing to which it has sent its shares over 10 percent. Also, it wiped out $31 billion from its market capitalization.
The Chief Financial Officer Brett Biggs said in an interview that the online grocery has continued to escalate. Also, they have different novel brands in e-commerce that also include partnership with Lord and Taylor. According to him the idea of free two days shipping helped a lot them in honing growth.
INTERNATIONAL BOOST IN E-COMMERCE
On a constant currency basis, International sales were up 4.5 percent at $28.3 billion, which was helped by an early Easter according to Biggs.
The company has today gained momentum. It has decided to fix its international portfolio. Most importantly, it has made its largest deal ever- it has said that will adopt a 77 percent stake in Indian e-commerce firm Flipkart for $16 billion, so that it would compete the economic giant- Amazon.com. Also, it has planned to sell most of its stake to J Sainsbury PLC from its UK grocery chain Asda Group LTD.
Moreover, Wal-Mart has decided to sell its banking operations in Wal-Mart Canada and Wal-Mart Chile.
The adjusted earnings were $1.14 per share except special items. The expected estimate on the contrary was $1.12 per share.
China’s Huawei rebuts Australian security concerns amid Sino-Canberra tensions
There are ongoing clashes China and Australia since Chinese telecoms equipment maker Huawei Technologies has recently negated the claims of Australia that it poses security risks. In an open letter on Monday the firm called the criticism ‘ill-informed’ that is likely to escalate the tensions between Sino-Canberra. Moreover, according to Australian media reports, Australia fears that the company is de facto controlled by China and sensitive infrastructure will fall into the hands of Beijing, hence it seems that Australia will ban Huawei from participating in a 5G mobile telecommunications roll-out in the nation.
Huawei disagreed the accusations, and, in a move that hovers to draw Australian politicians into a public fight that will further deteriorate relations with China, terminated Canberra’s security concerns.
Huawei Australia Chairman John Lord and board directors John Brumby and Lance Hockridge wrote in the unprecedented letter that the role of Huawei in Australia as well as some observations was taken in a recent public commentary around China. According to them the comments are not based on facts.
Despite the fact that Huawei is world’s largest maker of telecommunications network equipment, also it is the number three smartphone supplier, U.S. has banned it from its market due to security concerns.