What's going on?

Wal-Mart�s stock jumped 3% on Tuesday after it reported that its in-store and online sales increased in the fourth quarter of 2016.

What does this mean?

As part of a turnaround plan announced in late 2015, Wal-Mart has invested billions in ecommerce, which it expects to be an engine of growth in the years to come. Its online sales went up by 29% last quarter, thanks to rising online grocery sales and its recent acquisition of Jet.com. Wal-Mart�s turnaround also involves sprucing up its stores, and the move seems to be paying off as in-store sales rose by 1.8% at the end of 2016 versus one year ago, the biggest increase since 2012!


But all these improvements come at a cost: while sales were up, higher costs from its new initiatives meant that profits were down 18% versus last year. But for now, investors� attention is focused elsewhere (see below).

Why should I care?

For markets: Investors are more interested in Wal-Mart�s future growth than in its current profits.

Wal-Mart has been spending big and buying companies to solidify its future in the era of online shopping. While these costs have been eating into the company�s profits, investors seem to think that they�re a worthwhile investment in future sales growth. Besides, Wal-Mart can always decrease its costs (e.g. by scaling back investments), so lower profits don�t appear to be too big of a worry for now.

The bigger picture: Walmart is a bright spot on the map of US retail � for now. (tweet this)

While Wal-Mart might be doing nicely, things aren�t all that great for the rest of America�s big retailers. Macy�s, Kohl�s and Target all reported lackluster holiday sales, despite the boost in US consumer spending towards the end of 2016 (ecommerce seems to be winning this battle over traditional retail). Retailers are also preparing themselves for a potential Border Adjustment Tax, which is now being discussed in Congress � it�d mean a 20% tax on goods imported to America, which investors think will gnaw big time into US retailers� profits.