HedgeEye Thinks Wal-Mart's E-Commerce Business Is 'Unacceptable'

Shares of Wal-Mart Stores, Inc. (NYSE: WMT) were trading higher by more than 8 percent early Thursday morning as the company's first quarter top-and-bottom line beat is impressing investors following a slew of poor earnings from retailers.However, not everyone is convinced.Brian McGough of HedgeyeRetail looked beyond the headline numbers and suggested that Wal-Mart's e-commerce sales growth of 7 percent is "unacceptable."

Despite a solid print, $WMT's global e-commerce biz was up just 7%.
That's unacceptable from where we sit.

— Brian McGough (@HedgeyeRetail) May 19, 2016

Here are the facts about Wal-Mart's performance in the e-commerce space.On a constant currency basis, Wal-Mart's e-commerce sales and gross merchandise volume rose 7.0 percent and 7.5 percent, respectively.Looking into Wal-Mart's prepared remarks for its post-earnings conference call, management may actually agree with HedgeyeRetail's assessment."Growth here is too slow," Doug McMillon, President and CEO of Wal-Mart said. "The U.S. number is better than the global number but neither is as high as we'd like. We can see progress against several of the necessary capabilities we need to win in e-commerce but we're still working on a few others. We need them all to come together to see stronger growth."McMilon added that progress is being made in e-commerce as the company has brought online new fulfillment centers, or as he calls them ,"necessary building blocks."E-commerce contributed approximately 20 basis points to the company's overall comps. Online sales at Sam's Club contributed 60 basis points to the segment's comps.The executive also noted that he is "encouraged" by the "pace of operational improvements" made in China in both brick and mortar stores as well as e-commerce operations.Wal-Mart operates an e-commerce website in 11 countries. As whole, the company oversees 11,527 stores under 63 banners in 28 countries.