Walmart's online sales growth has sharply slowed - and it highlights a key weakness in its battle with Amazon
- Walmart's online sales grew 23% in the most recent quarter, down from 50% growth in the previous period.
- The company said it failed to keep some basic items in stock over the holidays, as it tried to manage higher demand of seasonal items like televisions and toys.
Walmart's online sales growth sharply slowed over the critical holiday period, falling to 23% growth from a staggering 50% jump in the previous quarter.
Walmart CEO Doug McMillon said Tuesday that most of the slowed growth was "expected and planned."
But some of it was because of operational issues. Specifically, Walmart failed to keep some basic items in stock during peak sales periods, McMillon said on a call with investors Tuesday.
Walmart had to stock more seasonal items in its warehouses like toys, televisions, and other electronics, which are in high demand during the holiday period, he explained.
In-stock levels on other non-seasonal items were "harmed" as a result, he said.
"We're learning how to deal with higher volumes," McMillon said on a call with analysts on Tuesday.
The fact that demand exceeded Walmart's expectations is a good sign for the business. But its inability to properly respond to that higher demand is concerning. Walmart shares fell nearly more than 7% in early trading on Tuesday.
Walmart assured investors that it would eventually fix the problem, saying it expects online sales growth to bounce back to 40% for the full upcoming year.
"We're not expecting the first quarter to go all the way to 40%" growth, McMillon said, hedging the company's prediction a bit. Instead, growth will ramp up gradually over the next four quarters and reach an average of 40% for fiscal 2019, he said.