Walmart Continues to Struggle as Market Rejects Strategy

By Douglas A. McIntyre Updated Jan 12, 1:40AM EST · Published Apr 8, 7:37AM EDT

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Walmart Continues to Struggle as Market Rejects Strategy — © Wolterk / iStock

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.

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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.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.