Walmart Inc.'s top executive on Nov. 14 said the retailer needs to "do more and move faster" to improve its online performance in product categories beyond groceries.
"Our strength is being driven by food, which is good, but we need even more progress on Walmart.com with general merchandise. We're mixing the business out better to achieve better margin rates, but there is more work to do," the company's CEO and President Doug McMillon said in a Nov. 14 statement accompanying the retailer's third-quarter earnings report.
While Walmart does not provide details on the profitability of its e-commerce business, so far, the retailer's online grocery business has supported the company's e-commerce business, executives said.
"We need to translate this repetitive food and consumable volume into a stronger Walmart.com business that's profitable over time, so that's what we're working on," McMillon said.
Walmart raised its fiscal 2020 adjusted EPS guidance after reporting third-quarter earnings that surpassed analysts' expectations. Net sales in the U.S rose to $83.19 billion from $80.58 billion, while comparable sales grew 3.2% during the third quarter.
The company's updated guidance reflects expected impacts from tariffs on Chinese imports including consumer goods, expected to take effect on Dec. 15. The U.S. and China are negotiating a phase one trade agreement to remove existing tariffs.
E-commerce sales in the U.S. grew 41% during the quarter, driven by strong growth in Walmart's online grocery business. The retailer has continued to invest in ramping up its grocery delivery services including launching an in-home delivery service that allows Walmart to deliver groceries and everyday essentials to a customer's kitchen or garage fridge.
"We think this could be a winning proposition as we expand our relationship with more families and grow our share of wallet," Walmart's CFO and Executive Vice President Brett Biggs said in the statement.
The retailer also plans to offer free same-day grocery pickup from over 3,100 stores this year and expects to offer same-day grocery delivery from 1,600 stores.
Over the last few years, in an effort to grow its online performance in the U.S., Walmart has purchased digital brands including Bonobos Inc., a men's clothing brand.
In its international markets, Walmart faced some hurdles in the U.K. and Chile during the third quarter. Concerns about Brexit negatively affected consumer spending in the U.K., resulting in a 0.5% drop in comparable sales in the country during the third quarter.
In Chile, the protests over social inequality forced the retailer to close a large number of its stores in October, many of which remain closed, according to the company. The ongoing civil unrest seriously affected Walmart's business, the company's executives said.
"We're continuing to manage through political and/or economic challenges that are affecting growth in several of our international markets, including the U.K. and Central America, both of which had negative comps in the quarter. But overall, our operating fundamentals are improving," Biggs said.
As Walmart continues to expand its healthcare business, the company said it plans to open a second health center location but did not give a specific date. The retailer opened its first health center in September in Dallas. The center provides services including primary care, dental, hearing, optical, counseling, community health, and health insurance education.
Walmart also said its store in El Paso, Texas, where a fatal shooting took place in August will reopen on Nov.14.
Walmart's shares spiked up in morning trading but then started to slide in the afternoon, losing about 0.97% to trade near $119.82 at 3:08 p.m.