uploads/2019/02/WMT-International-1.png

Will Currency Headwinds Hurt Walmart’s International Sales?

By

Updated

Past performance is impressive

Underlying sales for Walmart’s (WMT) international business have shown a strong comeback in the past several quarters. During the last reported quarter, underlying sales improved in nine out of its ten markets, which is encouraging. However, currency headwinds remained a drag. The graph below shows that Walmart’s international sales decreased during the third quarter, reflecting the negative impact of currency volatility. However, major international markets, especially Mexico, continued to post strong comps growth.

Article continues below advertisement

Outlook for Q4 

We expect underlying sales in Walmart’s international business could continue to rise, driven by the expansion of e-commerce offerings and price investments. Sales in the Walmex region, which includes Mexico and Central America, are expected to sustain the momentum. Walmart’s omnichannel offerings, new online grocery platform, and an increase in the marketplace sellers are expected to drive its sales in the Walmex region.

Net sales in China are expected to benefit from the momentum in Sam’s Club and expanded one-hour delivery service. Meanwhile, expansion of the online grocery pickup services and doorstep delivery are likely to drive sales in Canada. In the UK, Walmart’s private label brands, investment in price, and omnichannel offerings are expected to support comps growth.

Despite the improvement in underlying sales, we expect net sales growth to remain pressured as the sale of the majority stake in Brazilian operations and unfavorable currency rates could play spoilsport.

Advertisement

More From Market Realist