Strong performance in the US
Walmart (WMT) continues to generate improved comps and traffic in its US (SPY) segment thanks to the company’s value pricing, multi-channel offerings, and strong digital performance. Walmart has reported positive comps in its US segment, the largest business segment by sales and profits, for the past 12 consecutive quarters, while traffic improved in the past 11 quarters.
Notably, the company’s stellar performance comes at a time when other grocery retailers including Kroger (KR) are struggling to hold ground amid stiff competition from Amazon (AMZN) and other deep discount chains.
During the last reported quarter, fiscal 2Q18, Walmart’s US segment saw a 3.3% rise in its sales, reflecting 1.8% growth in comps. The segment’s traffic improved 1.3%, while the average ticket size rose 0.5%. Importantly, the company’s digital business added 70 basis points to the comps growth, reflecting the overwhelming customer response to its new and innovative services.
Going forward, Walmart is expected to benefit from its digital and in-store initiatives aimed at enhancing customers’ shopping experience. Management projects its US segment to report comps growth in the range of 1.5%–2.0% in fiscal 3Q18.
Walmart is successfully leveraging its vast retail presence. The company’s more than 4,700 stores and its strong foothold in rural areas give it an edge over Amazon and other grocery retailers, as the fulfillment of online orders in remote locations leads to higher delivery costs for them. In addition to its large-scale operations, the company’s ability to continue to invest in price and roll out innovative services matching Amazon is further expected to boost its market share in coming quarters. Moreover, the company is consolidating its US store operations, which could accelerate the pace of growth.