Wal-Mart Stores, Inc. (WMT), Amazon.com, Inc. (AMZN), eBay Inc (EBAY): Retailers Continue to Struggle Due to E-Commerce Competition

Once again, retail giant Wal-Mart Stores, Inc. (NYSE:WMT)  was listed as the top company in America on Forbes’ recent list of the top 500 companies (by annual revenue). With revenue for the TTM topping $469 billion, the company might have experienced more bad news than good after its first-quarter earnings. However, they weren’t alone.

Revenue

Wal-Mart Stores, Inc. (NYSE:WMT) fell 1.7% on Thursday last week after reporting disappointing revenue and profit in Q1. Although Wal-Mart’s revenue increased about 1% from the year-ago quarter, this was not as much as was expected. The store was not alone in this area, as J.C. Penney Company, Inc. (NYSE:JCP) actually lost $348 million in the first quarter alone. This was on top of the nearly $1 billion lost throughout the course of last year. Its revenue dropped 16% from the year-ago period.

Despite Same Store Sales (SSS) falling 17% for Penney’s, it was less than they fell a year ago. It actually lost 2% more last year than this quarter. Wal-Mart Stores, Inc. (NYSE:WMT)’s SSS also fell, but only 1.4% from one year ago.

Further disappointments

Unfortunately, this wasn’t where the issues stopped for Wal-Mart Stores, Inc. (NYSE:WMT). The retailer failed to meet expectations with earnings per share of $1.14, $0.01 less than expected by analysts. This leads to a earnings yield of 6.4% for Wal-Mart Stores, Inc. (NYSE:WMT).

E-commerce continues to rise

So what’s happening to these retailers? Where are consumers shopping? Where did the money go? The obvious answer to these retailers struggling is the advancement of e-commerce companies. For instance, Amazon.com, Inc. (NASDAQ:AMZN)‘s earnings once again beat expectations by just enough to keep investors interested. Yes, the company’s net income dropped 45%, but their net sales increased 22%.

Again, the company saw positive results in regards to its cash flow, as it increased  39% to $4.25 billion. This was $1.25 billion more than the previous year, and net sales reached levels of $16.07 billion compared to $13.18 billion last year. The company continues to attract customers because of its cheap prices (generally speaking), convenience, and variety. I don’t think there is any doubt that Amazon.com, Inc. (NASDAQ:AMZN) is playing a role in brick and mortar retailers’ woes.

eBay Inc (NASDAQ:EBAY)  saw income increase 19% in Q1, which was slightly lower than expectations. This just goes to show the power of e-commerce, as brick and mortar stores are losing income by almost as much. eBay Inc (NASDAQ:EBAY) may offer more opportunity to those investors willing to wait for it. With a 21% increase in transaction volume from PayPal and a 25% increase in merchant services. PayPal accounts for more than 40% of eBay Inc (NASDAQ:EBAY)’s total revenue.

eBay Inc (NASDAQ:EBAY)’s current marketplace customer count is at 116 million, 3.9 million than one year ago.Earnings per share for this e-retailer were right in the middle of expectations. Analysts were expecting between $0.62-$0.64/share and the company posted figures of $0.63.

A different point of view

eBay Inc (NASDAQ:EBAY)’s CEO, John Donahoe said after the company released its earnings:

“We had a strong first quarter, with accelerating user growth across both Marketplaces and PayPal. Technology is creating a commerce revolution, and we are in the forefront with strong mobile leadership and a focus on helping retailers and brands engage consumers anytime, anywhere.”

While J.C. Penney’s Chief Executive, Myron Ullman, had a slightly different tone when speaking of his company’s earnings:

“This won’t happen overnight. Rest assured, we recognize the magnitude of the challenges that we face.”

As the saying goes, there are two sides to every story. This is a perfect example of how true that saying is.

The Foolish bottom line

When comparing these two brick and mortar stores to the two e-commerce stores, it becomes obvious which direction the industry is headed. Amazon.com, Inc. (NASDAQ:AMZN) and eBay may not have blown expectations away, but that’s hard to do when some of those expectations are double-digit growth. E-commerce has and will continue to play a major role in all of these companies’ success. That could be good or bad, depending on how these companies plan on moving forward.

The article Retailers Continue to Struggle Due to E-Commerce Competition originally appeared on Fool.com and is written by Tyler Wofford.

Tyler is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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