Walmart Inc. (NYSE:WMT) has carved out a notable niche for itself in the retail landscape, with its stock surging by nearly 20% over the past year, surpassing the industry’s growth rate of 17.6%. The driving force behind Walmart’s remarkable performance can be attributed to its relentless pursuit of enhancing omnichannel capabilities and elevating the customer experience.
Over an extended period, Walmart has consistently posted growth in comparable sales, thanks to its exceptional performance across both physical stores and digital platforms. These positive trends suggest that Walmart is poised for continued success. In the last 30 days, the Zacks Consensus Estimate for the current fiscal year’s earnings per share (EPS) has increased from $6.22 to $6.42.
E-commerce Emerges as a Key Growth Driver
Walmart’s e-commerce operations have been on an expansion spree, with e-commerce net sales contributing 15% to the company’s total net sales during the second quarter. The company has been actively pursuing various e-commerce initiatives, including acquisitions, partnerships, and enhancements to delivery and payment systems.
Innovations in the supply chain, capacity expansion, and the launch of initiatives such as Walmart GoLocal, Walmart Connect, Walmart Luminate, Walmart+, Spark Delivery, Marketplace, and Walmart Fulfillment Services have paid off. In the second quarter of fiscal 2024, global e-commerce sales witnessed an impressive 24% surge, driven by the strength of its omnichannel capabilities, including pickup and delivery services.
Within the United States, e-commerce sales jumped by 24%, primarily fueled by robust pickup and delivery services and effective advertising campaigns. The International segment experienced a 26% increase in e-commerce sales, mainly driven by store-fulfilled orders. Sam’s Club also saw an 18% growth in e-commerce sales, largely attributed to the success of curbside pickup services.
Revamping Delivery Services
Walmart has made significant strides in strengthening its delivery capabilities through strategic moves like partnering with Salesforce, expanding its InHome delivery service, investing in DroneUp, launching the Walmart+ membership program, and conducting a pilot program with Cruise to explore self-driving electric vehicle-based grocery deliveries.
In addition to these initiatives, Walmart introduced Express Delivery in April 2021 and formed partnerships with Point Pickup, Skipcart, AxleHire, and Roadie in January 2019. The acquisition of Parcel in September 2017 was a pivotal move to enhance delivery services. Walmart also offers store and curbside pickup options. As of Q2 of fiscal 2024, Walmart U.S. boasted nearly 4,600 pickup locations and over 4,000 same-day delivery stores. As of January 31, 2023, the company had expanded its network to more than 8,100 pickup locations and nearly 7,000 delivery points worldwide.
Impressive Comparable Sales
Walmart’s strong e-commerce business, coupled with its stellar in-store operations, has been a driving force behind its impressive comparable sales. The company’s focus on store renovations, product enhancements, and in-store and digital advancements has been paying off. In the second quarter of fiscal 2024, WMT revamped 165 U.S. stores.
Walmart’s effective pricing strategy has also played a pivotal role in attracting and retaining customers. In the second quarter, U.S. comparable sales, excluding fuel, improved by 6.4%. This segment experienced significant growth in grocery and health & wellness. Furthermore, e-commerce contributed a substantial 230 basis points (bps) to comparable sales growth. Sam’s Club also posted a 5.5% increase in comparable sales, excluding fuel, with strength observed across most categories, particularly in food, consumables, and healthcare.
Looking Ahead
For fiscal 2024, Walmart is optimistic, expecting consolidated net sales to grow by 4-4.5% at constant currency (cc). Management anticipates consolidated operating income to rise by approximately 7-7.5% at cc, which includes a 30 bps positive impact of LIFO. Adjusted EPS is projected to fall within the range of $6.36-$6.46, signifying growth compared to the $6.29 recorded in fiscal 2023.”
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