Walmart Inc. (NYSE:WMT) has firmly solidified its position in the retail sector by showcasing its unyielding dedication to refining omnichannel strategies and enhancing customer experiences. The company has consistently achieved consecutive upticks in comparable sales, attributed to its remarkable performance across physical stores and online platforms.
Walmart Stock Performance
Walmart stock has shown a 16.3% rally in the past year, outperforming the industry’s growth of 14%. The Consensus Estimate for fiscal 2024 earnings per share has also risen from $6.25 to $6.42 in the past week.
This positive trajectory continued during the second quarter of fiscal 2024. In this period, both the top and bottom lines witnessed year-over-year growth, surpassing the Consensus Estimate. The impressive growth in global comparable sales and the strength of its omnichannel model were key drivers of these results. The robust second-quarter performance, bolstered business momentum, and positive customer feedback on its value plan have encouraged WMT to revise its fiscal 2024 guidance upwards.
For the fiscal year 2024, Walmart now anticipates a consolidated net sales growth of 4-4.5% at constant currency, compared to the previous projection of nearly 3.5% growth. Management expects the consolidated operating income to increase around 7-7.5% at constant currency, now including a 30-basis point positive impact from LIFO (Last In, First Out accounting method). The earlier projection was for a 4-4.5% increase in consolidated operating income at constant currency, with the LIFO impact. Management’s revised outlook now places the adjusted EPS in the range of $6.36-$6.46, up from the previous range of $6.10-$6.20.
Walmart’s Strong Comparable Sales
Walmart’s efforts to enhance its product offerings have been notably robust. The company has been focusing on store renovations while simultaneously implementing cutting-edge advancements both in-store and digitally. During the second quarter, WMT revamped 165 U.S. stores. Additionally, Walmart’s effective pricing strategy has played a crucial role in attracting and retaining customers.
U.S. comparable sales, excluding fuel, saw a 6.4% improvement, driven by a 3.4% rise in the average transaction value and a 2.9% growth in transactions. This segment experienced notable growth in the grocery and health & wellness sectors.
Furthermore, e-commerce contributed significantly to comparable sales, boosting it by 230 basis points. Sam’s Club also witnessed a 5.5% growth in comparable sales, excluding fuel. The club’s transactions increased by 2.9%, while the average transaction value went up by 2.5%. The strength in comparable sales was particularly evident in categories such as food, consumables, and healthcare.
E-commerce as a Key Driver
Walmart’s e-commerce business and omnichannel penetration have been on the rise. E-commerce net sales accounted for 15% of the company’s total net sales in the second quarter.
WMT has been actively pursuing various e-commerce initiatives, including acquisitions, partnerships, and enhancements in delivery and payment systems. The company has been innovating its supply chain, expanding capacity, and establishing ventures like Walmart GoLocal, Walmart Connect, Walmart Luminate, Walmart+, Spark Delivery, Marketplace, and Walmart Fulfillment Services.
During the second quarter of fiscal 2024, global e-commerce sales surged by 24%, propelled by the strength of omnichannel strategies, including pickup and delivery options. In the U.S., e-commerce sales grew by 24%, driven by robust performance in pickup & delivery services and advertising. The International segment experienced a 26% growth in e-commerce sales, fueled by strong in-store fulfillment. Sam’s Club also witnessed an 18% increase in e-commerce sales, attributed to exceptional curbside performance.
Enhancing Delivery Services
Walmart has significantly enhanced its delivery capabilities, as demonstrated by its collaboration with Salesforce, expansion of the InHome delivery service, investments in DroneUp, the introduction of the Walmart+ membership program, and a pilot program with Cruise to test grocery delivery using self-driven all-electric cars.
Prior to these initiatives, Walmart introduced Express Delivery in April 2021 and established partnerships with Point Pickup, Skipcart, AxleHire, and Roadie in January 2019. The acquisition of Parcel in September 2017 was a strategic move to elevate its delivery services.
The company’s store and curbside pickup options further contribute to customer convenience. As of the second quarter of fiscal 2024, Walmart U.S. had nearly 4,600 pickup locations and over 4,000 same-day delivery stores. By January 31, 2023, the company had expanded to more than 8,100 pickup and nearly 7,000 delivery locations worldwide.
Considering these positive factors, the retail giant is well-positioned to continue its trajectory of growth. Walmart stock has 13.21% upside potential, based on the analysts’ average price target of Walmart of $178.32.
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