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Walmart Stock Rises 4.5%: Is Growth in the Offing?

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Part 2
Walmart Stock Rises 4.5%: Is Growth in the Offing? PART 2 OF 3

Is Walmart Poised to Grow?

Strong e-commerce performance

Walmart (WMT) stock could benefit from the strong performance of its digital business. Its e-commerce sales rose 60.0% in fiscal 2Q18 compared to a 63.0% rise in fiscal 1Q18. As we saw in the previous part of this series, the company expects its digital business to generate sales of $11.5 billion in fiscal 2018 and projects it to grow 40.0% in fiscal 2019.

Walmart has stepped up its delivery mechanism, which is gaining traction in hopes of saving both time and money for consumers. The company is offering free two-day delivery on orders above $35 and is testing grocery deliveries and deliveries through its associates and Uber.

Is Walmart Poised to Grow?

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Walmart also recently acquired Parcel, which could help the company offer same-day deliveries in New York City. The company has expanded its online grocery pickup services to more than 1,000 stores and remains on track to add another 1,000 locations by the end of fiscal 2019. It has also installed order dispensers called pickup towers and plans to add 100 of them by January 2018. It’s offering pickup discounts and has expanded the payment options for EBT (electronic benefit transfer) customers. Walmart has also partnered with Google (GOOGL) to provide voice-based shopping.

The company will soon launch Mobile Express Returns to simplify and speed up the returns process. To improve merchandising and SKU (stock keeping unit) rationalization, it plans to bring in 2,000 category specialists. It has already hired 250 of them and expects to hire 40 to 50 more each month.

All these moves could result in higher sales and strengthen the company’s competitive positioning against rivals Amazon (AMZN), Costco (COST), and Target (TGT).

Walmart to open fewer stores

Walmart is focusing on the digital side of its business. Instead of opening new stores, it plans to invest more in its e-commerce platform and the remodeling of its existing stores to generate higher productivity. It wants to integrate its existing stores with technology, invest in its supply chain, and expand fulfillment capabilities, which are expected to result in higher productivity and sales. It anticipates opening fewer than 15 Walmart Supercenters and ten Walmart Neighborhood Markets in fiscal 2019 in the United States. It plans to open about 255 new stores in the international markets, with the majority of them in China (FXI) and Mexico. The numbers are much lower than previous years. 

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