Reshaping international strategy
Walmart (WMT) is transforming its global strategy, which has turned around its sales in international markets. The company has been cruising in Mexico, while Europe, China, and Canada are also seeing improving trends. Walmart’s expansion of e-commerce offerings and aggressive push for private label products, which are seeing higher growth, are driving its comps.
Meanwhile, the company’s strategy to scale back from certain underperforming regions and expand in high growth markets bodes well for future growth. For instance, Walmart merged Asda, its wholly owned subsidiary in the UK, with Sainsbury’s, as the company was facing intense competition from deep discounters. According to the terms of the deal, Walmart will retain 42% of the combined company and get ~$4.1 billion in cash. Moreover, the company sold the majority stake (80%) in its Brazilian operations to Advent International.
In addition, Walmart acquired a majority stake in India’s leading e-commerce company, Flipkart, and forged a strategic alliance with Japan’s Rakuten. The company has also expanded its one-hour delivery services through JD Daojia stores in China.
Walmart US expected to sustain growth
Walmart’s US business has been consistently performing well over the past several quarters. The company’s largest business segment has managed to improve its comps in the past 15 quarters, while traffic has increased on a YoY (year-over-year) basis in the past 14 quarters.
Walmart’s continued investment in price, multi-channel offerings, and supply-chain reinvention are expected to drive the segment’s sales higher.