Consequently analysts at Susquehana Financial Group have assigned a positive rating to the stock of Walmart and this is largely due to its dominant position in the food retail subsector. Ecommerce sales and GMV at Walmart U.S. for the fiscal year grew 44 percent and 47 percent, respectively.
The retailer managed to report weaker earnings per share at $1.33 versus what the market and most analysts predicted which was at $1.37. We explain. Plus - forget last the recent market selloff, we're still not even half-way through a 5 year Bull market.
Walmart is taking some bruises from its battle with online leader Amazon.
For comparison, Walmart's primary rival, Amazon, saw 42 percent growth in North America sales (90 percent of which were online) in the quarter ending December 31, 2017. Neil Saunders, Managing Director of retail consultancy GlobalData, wrote in a note to investors, "There are many demographics, especially younger and professional segments, for whom Walmart is not the destination of choice online.This isn't because it doesn't sell what they want".
In the past two quarters Walmart has managed to beat revenue estimates. The company said it is now analyzing the accounting impact of the Tax Act, but its analysis is incomplete.
Home Depot advanced 0.34 percent after the largest US home improvement chain's quarterly profit beat market estimates in an improving housing market.
Traders also welcomed news that grocery store operator Albertsons agreed to buy more than 2,500 Rite Aid stores. "We believe this is down to Walmart's focus on low prices plus better customer service, improved ranges and better-selling environments", Saunders said. Walmart blamed the bulk of the slowdown to the company's lapping its acquisition of online retailer Jet.com a year earlier.
Online sales were 23% higher in the three months to December.
"We had a really good last week and it is just a bit of a risk down today and certainly Walmart didn't help matters much", said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. Karen Short, a research analyst at Barclays, asked. It points to the underlying incongruity in the Walmart and Jet brands - which, for the most part, operate separately.
Walmart is having trouble keeping up with its e-commerce competition. McMillon said that expanding the online presence of grocery, which accounts for more than half of Walmart's total sales, will be key.
Walmart has also teamed up with Google to pursue technology that would allow customers to shop at home using voice commands as it tries to chip away at the dominance of Amazon's Alexa-powered Echo devices. He added, "This is a tough nut for Walmart to crack, and one that it can only break by more heavily marketing its services and proposition". However, Walmart needs to invest in evolving and adapting. "If it doesn't, it will become irrelevant".