BENTONVILLE, AR - Walmart’s online sales seem to be going through some growing pains as the retailer continues to ramp up e-commerce efforts. In the company’s Q4 and Fiscal 2018 financial results released early this week, Walmart showed drops in growth for both profit and online sales, but, according to President and CEO Doug McMillon, these slowdowns were mostly an inevitable part of what it will take for the retailer to establish a strong online base for next year’s holiday season.

Doug McMillon, President and CEO, Walmart"The majority of this slowdown was expected as we fully lapped the Jet acquisition, as well as created a healthier long-term foundation for holiday," shared Doug McMillon, President and CEO, during an earnings call with investors. "A smaller portion of the slowdown was unexpected as we experienced some operational challenges that negatively impacted growth."

According to the report, Walmart’s online sales for the fourth quarter grew just 23 percent, even with the holiday rush factored in. During the fourth quarter a year ago, online sales grew 29 percent, not to mention that online sales in the third quarter of this year were up a notable 50 percent. In total for the year, Walmart saw about $11.5 billion in U.S. e-commerce revenue, but lost money overall.

Brett Biggs, Executive Vice President and Chief Financial Officer, Walmart "As Doug mentioned, the slowdown in growth during the quarter was a bit more than we planned," said Executive Vice President and Chief Financial Officer Brett Biggs on the same call. "Looking ahead, we have a number of new initiatives planned for the year. We expect e-commerce growth to increase from the Q4 level as we enter the New Year, with about 40 percent growth for the year."

Despite Walmart’s preparation for the decline and its hope for the future, investors were still shaken by the news. According to Reuters, shares fell 9.4 percent, with the news source citing a nervousness that Walmart would not be able to compete with Amazon as it continues to grow its business. The stock was down $9.43 to $95.35.

Walmart storefront

In addition to the headline-grabbing e-commerce results, Walmart also reported the following highlights in its release on the results:

Fourth-quarter highlights

• GAAP EPS was $0.73 and adjusted EPS2 was $1.33
• Total revenue was $136.3 billion, an increase of $5.3 billion, or 4.1%
• Excluding currency, total revenue was $135.1 billion, an increase of $4.1 billion, or 3.1%
• Walmart U.S. comp sales increased 2.6%, and comp traffic increased 1.6%. On a two-year stack, comp sales growth of 4.4% marked the best performance in eight years
• Net sales at Walmart International were $33.1 billion, an increase of 6.7%. Excluding currency, net sales were $31.9 billion, an increase of 2.8%
• Consolidated operating income was $4.5 billion, a decrease of 28%

Fiscal 2018 highlights

• Total revenue was $500.3 billion, an increase of $14.5 billion, or 3.0%; Excluding currency, total revenue was $500.9 billion, an increase of $15.1 billion, or 3.1%

• e-Commerce sales and GMV at Walmart U.S. increased 44% and 47%, respectively

• Consolidated operating income was $20.4 billion, a decrease of 10.2%

• The company generated $28.3 billion in operating cash flow and returned $14.4 billion to shareholders through dividends and share repurchases

Despite the slowing growth, I think it’s safe to say this is just the beginning of what we’ll hear from Walmart in regards to its e-commerce plans. As the company continues on its retail battle, AndNowUKnow.com will continue to report.

Walmart