By Tonya Garcia, MarketWatch
GlobalData Managing Director Neil Saunders notes that the holiday challenges at Walmart weren’t unique to that retailer. Target Corp. /zigman2/quotes/207799045/composite TGT +3.29% , for instance, talked about the bigger-than-expected challenges of the shortened holiday season.
However, Walmart saw some cannibalization from its e-commerce business, which grew 35% in the fourth quarter, with customers opting for a digital purchase rather than going to stores, Saunders said.
Amazon.com Inc. /zigman2/quotes/210331248/composite AMZN +1.72% didn’t help either.
“Competition from Amazon heated up across multiple categories as its spending initiatives further heightened promotional activity as it drove sales above management’s forecast, though in doing so it ‘sacrificed’ around 150 basis points of margin for the quarter,” Moody’s O’Shea said.
What also hurt was unrest in Chile, with Biggs saying that some stores in that country were destroyed during political protests. The business there is not expected to recover in the coming fiscal year.
Disruption in Chile coupled with a legal matter cost 5 cents per share in the fourth quarter. Chile hurt operating income by about $110 million.
“Overall, we think Walmart likely wasn’t immune from some of the near-term pressures like a shortened holiday season that impacted competitors such as Target during the holiday season,” wrote UBS analysts led by Michael Lasser.
“Still its early guidance leads us to believe that its current year-to-date performance in February has been strong and it’s well positioned to take further share.”
UBS rates Walmart stock neutral with a $125 price target.
Walmart stock is up 18.4% over the last year. The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.07% has gained 13% for the period.