Walmart figured out its amazon strategy. so why’s the stock down 13% data recovery no root

McMillon has told Wall Street that Walmart wants to become a top destination for younger shoppers. Walmart has "a bit of a longer-term point of view beyond three to five years as it relates to setting the company up for growth and profits in the future," he repeated to analysts in February.

Investors initially bought into the strategy, but they’re getting impatient. Walmart’s ( WMT) stock is down 13% on slower-than-expected online sales growth for the last three months of 2017. Investors also gave a $16 billion deal for Indian online retailer Flipkart an icy response.

Since then, Walmart has scooped up native online fashion, apparel and home decor brands ModCloth, Bonobos, Moosejaw and Hayneedle and built out its private-label collection. It acquired Parcel, a logistics startup that provides same-day delivery for online purchases in New York.


On Wednesday, Walmart announced a partnership with department chain Lord & Taylor for an online store on Walmart’s website.

"Walmart is the only firm that has the management, capital and the scale to compete with Amazon," said Scott Galloway, a marketing professor at NYU’s Stern School of Business. "They’ve probably done as good a job of getting off their heels and on their toes as any retailer in the world."

In a new website redesign, Walmart played down its name and traditional bright blue colors to create "a cleaner and more modern digital shopping experience," Lore said. It has purposefully not branded any of its new fashion companies with the Walmart name. And the company is remodeling stores and tightening demands on suppliers to ensure items are always in stock and on the shelves.

It has reshuffled its strategy overseas, too. Walmart took a minority stake in online retailer JD.com in China two years ago. It retrenched a mature UK market by selling control of supermarket chain Asda and recently paid $16 billion for Flipkart in India, the largest deal in its history. It will take years for Flipkart to become profitable, but Walmart believes it can tap into India’s $200 billion online market.

"I think Flipkart is a waste of capital. They have a very poor track record of investing overseas. They’re just bringing a checkbook," said Scott Mushkin, an analyst at Wolfe Research. "The desire to grow in e-commerce and India will drain the organization slowly of profits."

Customers that shop Walmart both through stores and online spend nearly twice as much as those who only make purchases in stores, McMillon says. Walmart hopes to use its physical proximity to Americans and low prices to build awareness of its digital businesses and lock customers into an Amazon-like Prime ecosystem.

Groceries are Walmart’s backbone, accounting for more than half of its $500 billion in sales. Amazon’s acquisition of Whole Foods last year and its expansion of grocery delivery and Prime discounts at Whole Foods will test Walmart’s hold on the industry. Amazon announced on Wednesday that it was offering Prime members an additional 10% off sale items when they shop at Whole Foods.

Walmart’s stores give it a leg up in the race, according to Cowen analyst Oliver Chen. The company has more than 1,100 online grocery pickup locations, a free service where customers can order groceries and drive to pick them up. Encouraging pickup will help Walmart avoid expensive grocery shipping costs.

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