Shelly Banjo is a Bloomberg Gadfly columnist covering industrial companies and conglomerates. She previously was a reporter at Quartz and the Wall Street Journal.

Anyone who has stood in line at Walmart during a Black Friday sale knows the wait can be long and taxing. Watching to see if and when Wal-Mart Stores Inc. turns around its e-commerce business is no different.

Positive signs emerged Thursday, when the world's largest retailer said online sales rose 20.6 percent from a year ago, helped in part by six weeks of sales from, the web business Walmart acquired during the quarter for $3.3 billion.

Strong Buy
Walmart's purchase of helps boost its e-commerce sales
Source: Bloomberg, Walmart

What the online sales growth would have been without the help from Jet -- not to mention adjusting for the Chinese web business it sold to -- is murky.

But the results marked the second quarter of accelerating online sales growth, after more than two years of slowing growth. Walmart also said it expanded its grocery pickup service, where customers order food online and pick it up in stores, to 600 locations from 400 in the previous quarter. 

Still, with an operation as big as Walmart, it's basically impossible to be firing on all cylinders. Recent history shows Walmart rarely grows sales and profits meaningfully at the same time.

Too Big To Grow
In recent years, Walmart has struggled to grow sales and profits at the same time. If sales at established stores grow from the year before, operating income tends to decline and vice versa.
Source: Bloomberg

In the third quarter, sales at established U.S. stores grew by 1.2 percent from the year before, marking two years of positive sales growth, though the metric missed analyst estimates and marked a deceleration from the previous quarter. 

Sales Streak
Walmart's sales growth in the latest quarter extended a string, but fell short of Wall Street's expectations
Source: Bloomberg

Meanwhile, operating income dropped 10.4 percent in the quarter as labor and e-commerce investments continue biting into profits. 

Walmart's slight sales miss was unexpected, sending shares down around 4 percent Thursday. But the profit weakness was no surprise: Walmart has warned investors it doesn't plan to grow profits until 2019. Taking an Amazon-like approach to managing expectations, it hopes to get a pass on profits so it can boost sales and attract more customers to shop on its digital channels.

Not everyone is buying the explanation. Billionaire investor Warren Buffett, for one, has drastically reduced his shares in the company over the past year. 

Buffett Bail
Warren Buffett's Berkshire Hathaway has sold more than 5 million shares of Walmart over the past year
Source: Bloomberg

But the great re-framing has bought Walmart a few more years of patience from Wall Street as it positions itself to better compete with Amazon. Twenty-one of the 34 analysts who cover Walmart and are tracked by Bloomberg rate the stock a "hold." (It has three "sell" ratings and 10 "buy" ratings.)

But to make all this profit-bleeding worth it, Walmart has to show some real progress in e-commerce sales. Positive third quarter-results helped, but they were a bit too muddled with acquisitions and disposals to be a good judge of improvement yet. 

Replacing e-commerce chief Neil Ashe with founder Marc Lore was a good move, as was the infusion of Jet executives into the top executive ranks of Walmart's global e-commerce operation.

All eyes now turn to the upcoming holiday season, where the name of the game is using online channels to grab market share and customer data to hook shoppers for the rest of the year. Unless investors see real signs of online sales growth during the fourth quarter, they might just give up waiting in line. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Shelly Banjo in New York at

To contact the editor responsible for this story:
Mark Gongloff at