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Why Walmart Stock Underperformed in H1 2018

Amit Singh - Author
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Aug. 18 2020, Updated 5:16 a.m. ET

Walmart stock fell 13.3% in H1 2018

After seeing stellar growth in 2017, Walmart (WMT) stock underperformed in the first six months of 2018. Its peers Costco (COST) and Target (TGT) rose 12.3% and 16.7%, respectively, during the same period.

Walmart stock took a beating in February after it reported a slowdown in its e-commerce sales in its fiscal fourth quarter of 2018. Although Walmart’s digital sales reaccelerated in its fiscal first quarter of 2019, the stock hasn’t recovered yet.

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What’s hurting Walmart stock?

Walmart has taken several strategic measures that are likely to accelerate its e-commerce sales growth rate. The company has expanded its money- and time-saving offerings such as doorstep delivery, grocery pickup services, and pickup towers to newer markets.

However, analysts believe that growing competition in the domestic market is likely to affect Walmart. Its rival Target has significantly increased its digital capabilities. Kroger (KR) is also emerging as a tough competitor in the grocery business, and Costco continues to offer higher value, thus reporting stellar sales and earnings growth.

Investors don’t seem to be happy about Walmart’s Flipkart acquisition since the deal could subdue its margins in the near term. Analysts also argue that instead of acquiring Flipkart, Walmart could have used the funds to strengthen its competitive position in the domestic market.

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