Walmart Says It’s Not Lowering Forecast Because of Coronavirus

Walmart said on Tuesday that while it continued to monitor the coronavirus outbreak in China and around the world, the company was not lowering its sales forecast for this year.

The announcement, released with Walmart’s fourth-quarter earnings, that the coronavirus had not yet affected the outlook for the year for the world’s largest retailer came one day after Apple warned of a slowdown. The iPhone maker had said that the supply of smartphones was hampered because the factories in China where they are made were not resuming production as quickly as expected. Apple also said demand for its smartphones in China had been hurt because the virus outbreak had forced the company to close all 42 of its stores.

Walmart relies on factories in China to produce an estimated 15 percent of its merchandise. That’s a smaller percentage than other American retailers like Target and Best Buy, but still a significant part of its supply chain.

Walmart did note that its holiday sales were “a little softer than expected,” leading to a rare miss of its revenue and sales targets in its most recent quarter.

  • Updated Feb. 10, 2020

    • What is a Coronavirus?
      It is a novel virus named for the crown-like spikes that protrude from its surface. The coronavirus can infect both animals and people, and can cause a range of respiratory illnesses from the common cold to more dangerous conditions like Severe Acute Respiratory Syndrome, or SARS.
    • How contagious is the virus?
      According to preliminary research, it seems moderately infectious, similar to SARS, and is possibly transmitted through the air. Scientists have estimated that each infected person could spread it to somewhere between 1.5 and 3.5 people without effective containment measures.
    • How worried should I be?
      While the virus is a serious public health concern, the risk to most people outside China remains very low, and seasonal flu is a more immediate threat.
    • Who is working to contain the virus?
      World Health Organization officials have praised China’s aggressive response to the virus by closing transportation, schools and markets. This week, a team of experts from the W.H.O. arrived in Beijing to offer assistance.
    • What if I’m traveling?
      The United States and Australia are temporarily denying entry to noncitizens who recently traveled to China and several airlines have canceled flights.
    • How do I keep myself and others safe?
      Washing your hands frequently is the most important thing you can do, along with staying at home when you’re sick.

The retailer said its same-store sales in the United States grew 1.9 percent during the quarter ending January 31, which was lower than the 2.3 percent that Wall Street analysts had expected. The company’s adjusted earnings per share of $1.38 were less than the $1.43 it had forecast, while revenue was $141.7 billion, slightly less than Wall Street’s expectation of $142.5 billion.

The company blamed its disappointing results on political turmoil in Chile, as well as “softness” in a few general merchandise categories in its United States stores.

“Sales leading up to Christmas in our U.S. stores were a little softer than expected,” Doug McMillon, chief executive of Walmart, said in a statement.

The one bright spot in the quarter was record sales growth in e-commerce of 37 percent.

Walmart said late last month that its 430 stores in China have remained open during the health crisis because the retailer supplies food and other critical household staples. Store hours have been reduced, however, because many customers are subject to quarantines.

Walmart was one of the first American retail brands to operate in China, opening its first store there in 1996. Although its network of stores in China is not large compared to its footprint in other markets, Walmart has made large investments in online shopping in the country.

Walmart owns a minority stake in, one of China’s leading e-commerce players. The two companies recently invested together in a grocery delivery start-up. Walmart said on Tuesday that its assumptions of the value of its equity stake in JD had not changed.

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