BENTONVILLE, Ark. (AP) -- Walmart reported a fourth-quarter profit that missed Wall Street expectations and struggled with slower e-commerce sales during the period.
Its shares slipped more than 6 percent before the market open on Tuesday.
Still, the world's largest retailer announced better-than-expected sales overall and higher customer counts as the company overhauls its stores and its online services.
The mixed results reflect Walmart's continued challenges to fight online leader Amazon even as it makes huge investments in both its digital business and stores. E-commerce sales in its U.S. business slowed to 23 percent during the fourth quarter, from 50 percent in the third quarter. The company blamed some of the slowdown to "operational challenges" Still, the company finished the year with more than 40 percent growth in online sales and it expects that pace to continue for the coming year.
The nation's largest private employer announced last month that it would raise the starting salary for U.S. workers to $11 an hour, giving one-time cash bonus of up to $1,000 to eligible employees and expanding its maternity and parental leave benefits. A number of U.S. corporations have announced employee bonuses and expanded benefits following drastic changes to the U.S. tax code.
But a hot economy has now forced employers to compete for workers who can be more choosey. The U.S reported this month that hourly pay rose in January from a year earlier at the fastest pace in eight years and the unemployment rate hovered at only 4.1 percent for the fourth consecutive month.
Since buying Jet.com for more than $3 billion a year and a half ago, Walmart has added online services, acquired brands like Bonobos and ModCloth and vastly expanded the number of items available online. Walmart is also getting ready to launch an overhauled website with a focus on fashion and home furnishings. It has teamed up with Lord & Taylor to create dedicated space on its site.
Walmart has aggressively cut prices and is planning to double the number of stores where groceries can be ordered online and picked up curbside at a store, to 2,000 locations this year.
Walmart has also teamed up with Google to pursue technology that would allow customers to shop using voice commands at home as it tries to chip away the dominance of Amazon's Alexa-powered Echo devices.
"We're accelerating innovation in the business to make shopping faster and easier for our customers," said Doug McMillon, CEO of Walmart Inc. in a pre-recorded transcript. "Creativity, decisiveness and speed are priorities. We made good progress this past year to save busy families time and money and we will do more."
But Walmart has a long way to get even close to Amazon's online dominance. Amazon has leveraged its $99-a-year Prime membership program into intense loyalty from customers, and it's recently stepped into Walmart's turf, no longer content with only online sales. After spending $14 billion to acquire Whole Foods last summer, Amazon just announced two-hour delivery from the grocery chain for its members.
Walmart, based in Bentonville, Arkansas, reported that it earned $2.17 billion, or 73 cents per share, in the three month period ended Jan. 31. That compares with $3.76 billion, or $1.22 per share, in the year-ago period.
Excluding charges, Walmart earned $1.33 per share.
The results fell short of Wall Street expectations. Analysts surveyed by Zacks Investment Research were calling for earnings of $1.36 per share..
The world's largest retailer posted revenue of $136.27 billion in the period, exceeding the $135.04 billion that analysts polled by Zacks predicted.
Revenue at stores opened at least a year rose 2.6 percent at its namesake U.S. stores. That marked the 14th consecutive quarter of increases. Customer counts rose 1.6 percent.
The company said that the strength was "broad-based" across all merchandise categories, and that holiday sales were solid.
McMillon said that the cost to acquire a new customer on a nationwide basis is cheaper with the Walmart brand than it is with the Jet brand so it's investing more in Walmart.com and reducing marketing investment in Jet except in certain urban markets. Due to this change, Jet will not grow as quickly as it did in its early days, he said.
At Walmart's Sam's Clubs, same-store sales rose 2.4 percent in the fourth quarter. The company announced earlier this month that it was offering free shipping for premium members and simplifying its membership tiers.
Last month, Sam's Club began closing 63 U.S. clubs while turning a dozen of them into warehouses for digital sales, with the goal of speeding up deliveries.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on WMT at https://www.zacks.com/ap/WMT