A rock-solid earnings report today for retail giant Walmart has finally put fears to rest amongst investors and consumers alike that the blue and yellow brand may be losing too much ground to competitors like Amazon, according to CNN Money.
Digital sales surged by an enormous 40 percent, likely aided by a complete teardown and site redesign of the retailer’s online portal which was hitherto awkward to use and cumbersome in a logistical sense. Industry analysts had reportedly been skeptical of Walmart’s multiple large acquisitions — including Moosejaw, Jet, and fashionista favorite ModCloth — but it appears that said investments are beginning to pay dividends prior to even reaching their full market potential.
Bloomberg reports that Walmart stock increased by 11 percent, the highest intraday trading jump since October of 2008. The result is not only fueled by the aforementioned factors but also a very steady and sustained growth in the grocery section of the brick and mortar storefronts. Grocery sales improved in a banner year, rising the most they have in nearly a decade backed by the improvement of Walmart’s grocery offerings, a new focus being on fresh food offerings over traditional frozen fare and dry goods. Year-over-year sales improved by a whopping 4.5 percent, or double what financial analysts had predicted for the retail titan, a major factor spurring the stock market rally for the WMT listing and fabulous news for existing shareholders.
Walmart has been consistently ramping up their efforts to compete with Jeff Bezos and Amazon’s worldwide operations, according to CNBC — of particular note their purchase of Indian e-commerce establishment Flipkart in a $16 billion deal that saw a lot of consumer power placed in Walmart’s hands. In addition to this, Walmart made an agreement with Lord & Taylor that would see a slew of new merchandise hitting Walmart store shelves both in physical form and via their online portals.
Like so many competitors in the retail sector, Walmart is facing increasing upward pressure on their bottom line caused by economic stressors primarily related to trucking and transport of their consumer goods. The rising cost of gasoline and diesel, as well as a rising dearth of long-haul truck drivers in the transportation job pool, have contributed to increased delivery costs. Tough talk by President Donald Trump on the imminent possibility of increased import tariffs may also cut into retailers’ bottom line, particularly those with strong ties to international trade — both Amazon and Walmart brands being potentially affected.
Mitigation strategies are currently being discussed and are being considered for implementation in response to any such tariff actions, according to Walmart CFO Brett Biggs.
“While we know questions persist about tariffs, the potential future impact is difficult to quantify… We are closely monitoring the tariff discussions and are actively working on mitigation strategies, particularly in light of potentially escalating duties.”
Despite the looming cloud on the horizon that is a potential trade war and accompanying tariffs, Walmart shareholders and executives have reason to be satisfied with the recent rally in their business and their brand as all of their riskiest moves over the course of the past year seem to have begun to pay off, with even greater potential being unlocked moving forward into the final months of 2018 and into 2019.