Retail
Walmart Continues to Struggle as Market Rejects Strategy
Published:
Last Updated:
Walmart Inc. (NYSE: WMT), the world’s largest retailer, cannot get traction with shareholders. Despite deep troubles with its primary rival, Amazon.com Inc. (NASDAQ: AMZN), it has not been able to sell its mix of huge superstores with a strong e-commerce presence.
As Amazon comes under pressure for its payments to the U.S. Postal Service and questions about why it does not collect local and state taxes, Walmart has an unusual window to pick up business from America’s e-commerce business.
Among Walmart’s challenges is that many on Wall Street still view it as a larger version of Target Corp. (NYSE: TGT), or worse, troubled retailers like Macy’s Inc. (NYSE: M). Granted, Walmart has entire segments of retail that these others do not, particularly groceries. However, Kroger Co. (NYSE: KR), the huge grocery store chain, is a formidable competitor, particularly as it tries to hold off Amazon’s efforts led by its purchase of Whole Foods. Groceries are getting crowded.
Next, Walmart’s same-store sales are growing slowly. Investors consider a 2% year-over-year quarterly improvement impressive. It really isn’t when e-commerce sales nationwide are moving higher by double digits and Amazon’s growth is even more rapid.
If investors worry about one factor over all others, it is an old one. Walmart may have an impressive presence online, but it is far from close to Amazon’s. Walmart has tried to buy its way into a better position with deals like its acquisition of Jet.com in 2016, an M&A transaction that cost Walmart $3.3 billion. The arrangement may have lifted Walmart’s presence online, but not enough to support the case it can make a major dent in Amazon’s market share.
One reason investors are skeptical of Walmart’s online success is Amazon’s ability to draw and hold customers with its Prime streaming media and free shipping subscription service. Another is the line of consumer electronics products Amazon has, particularly its Alexa-powered home assistance product.
Walmart’s stock price reflects the anxiety that it is too reliant on its stores and does not have a strong enough online arsenal.
Want to Retire Early? Start Here (Sponsor)
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
