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Walmart's (WMT) Growth Tale Highlighted by Omnichannel Prowess
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Walmart Inc. (WMT - Free Report) has firmly established itself in the realm of retail through its unwavering commitment to refining omnichannel strategies and elevating customer experiences. The company has sustained successive increases in comparable sales for a while now, attributed to its impressive performance across physical stores and online platforms.
This positive trajectory continued in the second quarter of fiscal 2024. During the quarter, the top and bottom lines increased year over year and beat the Zacks Consensus Estimate. Strong comp sales growth globally and a solid omnichannel model backed results. Solid second-quarter results, confidence in the ongoing business momentum and a favorable customer response to its value plan encouraged WMT to pull up its guidance for fiscal 2024.
For fiscal 2024, Walmart now expects consolidated net sales growth of 4-4.5% at cc compared with the previous view of nearly 3.5% growth. Management expects the consolidated operating income to increase roughly 7-7.5% at cc now, including a 30-bps positive impact of LIFO. The consolidated operating income was earlier expected to increase 4-4.5% at cc, including the LIFO impact. Management now envisions an adjusted EPS in the band of $6.36-$6.46, up from the earlier range of $6.10-$6.20.
This Zacks Rank #2 (Buy) stock has rallied 16.3% in the past year compared with the industry’s growth of 14%. The Zacks Consensus Estimate for fiscal 2024 earnings per share has moved up from $6.25 to $6.42 over the past seven days.
Walmart's initiatives to improve its product offerings have been indeed robust. The company has been paying attention to renovating stores, alongside undertaking cutting-edge in-store and digital advancements. WMT remodeled 165 U.S. stores in the second quarter. Walmart's effective pricing strategy has also proven advantageous, playing a pivotal role in attracting and retaining customers.
U.S. comp sales, excluding fuel, improved by 6.4% due to a 3.4% increase in the average ticket and transaction growth of 2.9%. The segment experienced gains from grocery and health & wellness.
Moreover, e-commerce boosted comps by 230 bps. Sam’s Club’s comp sales, excluding fuel, grew 5.5%. While transactions grew 2.9%, the average ticket rose 2.5%. Comp sales saw strength across most categories, mainly led by food and consumables and healthcare.
Image Source: Zacks Investment Research
E-commerce – a Key Catalyst
Walmart’s e-commerce business and omnichannel penetration have been increasing. E-commerce net sales formed 15% of the company’s overall net sales in the second quarter.
WMT has been taking several e-commerce initiatives, including buyouts, alliances, and improved delivery and payment systems. The company is innovating in the supply chain and adding capacity as well as building businesses, such as Walmart GoLocal, Walmart Connect, Walmart Luminate, Walmart+, Spark Delivery, Marketplace and Walmart Fulfillment Services.
In the second quarter of fiscal 2024, e-commerce sales surged 24% globally on omnichannel strength, including pickup and delivery. U.S. e-commerce sales rose 24%, driven by strength in pickup & delivery and advertising. The International segment’s e-commerce sales ascended 26% on store-fulfilled strength. At Sam’s Club, e-commerce sales jumped 18% on strong curbside performance.
Efforts to Bolster Delivery Services
Walmart has significantly bolstered its delivery capabilities, as exemplified by its partnership with Salesforce, the expansion of the InHome delivery service, investments in DroneUp, the launch of the Walmart+ membership program and a pilot with Cruise to test grocery delivery through self-driven all-electric cars.
Preceding these endeavors, Walmart introduced Express Delivery in April 2021, and in January 2019, it forged partnerships with Point Pickup, Skipcart, AxleHire and Roadie. Additionally, the acquisition of Parcel in September 2017 was a strategic move to elevate its delivery service.
The company’s store and curbside pickup options add to customers’ convenience. As of the second quarter of fiscal 2024, Walmart U.S. had nearly 4,600 pickup locations and more than 4,000 same-day delivery stores. As of Jan 31, 2023, the company had more than 8,100 pickup and nearly 7,000 delivery locations globally.
Taking into account the aforementioned upsides, the supermarket behemoth is well-positioned to continue its growth narrative.
Other Solid Picks
Here we have highlighted three other top-ranked stocks.
The Zacks Consensus Estimate for Kroger’s current financial-year EPS suggests an increase of 2.2% from the year-ago reported figure. Kroger has a trailing four-quarter negative earnings surprise of 7.8%, on average.
Ross Stores (ROST - Free Report) currently carries a Zacks Rank #2. This off-price retailer has an expected EPS growth rate of 11.3% for three to five years.
The Zacks Consensus Estimate for Ross Stores’ current financial-year EPS suggests growth of 13.5% from the year-ago reported figure. ROST has a trailing four-quarter negative earnings surprise of 11.5%, on average.
The TJX Companies (TJX - Free Report) has an expected EPS growth rate of 10.8% for three to five years. This off-price retailer holds a Zacks Rank #2 at present.
The Zacks Consensus Estimate for The TJX Companies’ current financial-year EPS suggests growth of 15.4% from the year-ago reported figure. TJX has a trailing four-quarter earnings surprise of 6.6%, on average.
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Walmart's (WMT) Growth Tale Highlighted by Omnichannel Prowess
Walmart Inc. (WMT - Free Report) has firmly established itself in the realm of retail through its unwavering commitment to refining omnichannel strategies and elevating customer experiences. The company has sustained successive increases in comparable sales for a while now, attributed to its impressive performance across physical stores and online platforms.
This positive trajectory continued in the second quarter of fiscal 2024. During the quarter, the top and bottom lines increased year over year and beat the Zacks Consensus Estimate. Strong comp sales growth globally and a solid omnichannel model backed results. Solid second-quarter results, confidence in the ongoing business momentum and a favorable customer response to its value plan encouraged WMT to pull up its guidance for fiscal 2024.
For fiscal 2024, Walmart now expects consolidated net sales growth of 4-4.5% at cc compared with the previous view of nearly 3.5% growth. Management expects the consolidated operating income to increase roughly 7-7.5% at cc now, including a 30-bps positive impact of LIFO. The consolidated operating income was earlier expected to increase 4-4.5% at cc, including the LIFO impact. Management now envisions an adjusted EPS in the band of $6.36-$6.46, up from the earlier range of $6.10-$6.20.
This Zacks Rank #2 (Buy) stock has rallied 16.3% in the past year compared with the industry’s growth of 14%. The Zacks Consensus Estimate for fiscal 2024 earnings per share has moved up from $6.25 to $6.42 over the past seven days.
Walmart Inc. Price, Consensus and EPS Surprise
Walmart Inc. price-consensus-eps-surprise-chart | Walmart Inc. Quote
Strong Comparable Sales
Walmart's initiatives to improve its product offerings have been indeed robust. The company has been paying attention to renovating stores, alongside undertaking cutting-edge in-store and digital advancements. WMT remodeled 165 U.S. stores in the second quarter. Walmart's effective pricing strategy has also proven advantageous, playing a pivotal role in attracting and retaining customers.
U.S. comp sales, excluding fuel, improved by 6.4% due to a 3.4% increase in the average ticket and transaction growth of 2.9%. The segment experienced gains from grocery and health & wellness.
Moreover, e-commerce boosted comps by 230 bps. Sam’s Club’s comp sales, excluding fuel, grew 5.5%. While transactions grew 2.9%, the average ticket rose 2.5%. Comp sales saw strength across most categories, mainly led by food and consumables and healthcare.
Image Source: Zacks Investment Research
E-commerce – a Key Catalyst
Walmart’s e-commerce business and omnichannel penetration have been increasing. E-commerce net sales formed 15% of the company’s overall net sales in the second quarter.
WMT has been taking several e-commerce initiatives, including buyouts, alliances, and improved delivery and payment systems. The company is innovating in the supply chain and adding capacity as well as building businesses, such as Walmart GoLocal, Walmart Connect, Walmart Luminate, Walmart+, Spark Delivery, Marketplace and Walmart Fulfillment Services.
In the second quarter of fiscal 2024, e-commerce sales surged 24% globally on omnichannel strength, including pickup and delivery. U.S. e-commerce sales rose 24%, driven by strength in pickup & delivery and advertising. The International segment’s e-commerce sales ascended 26% on store-fulfilled strength. At Sam’s Club, e-commerce sales jumped 18% on strong curbside performance.
Efforts to Bolster Delivery Services
Walmart has significantly bolstered its delivery capabilities, as exemplified by its partnership with Salesforce, the expansion of the InHome delivery service, investments in DroneUp, the launch of the Walmart+ membership program and a pilot with Cruise to test grocery delivery through self-driven all-electric cars.
Preceding these endeavors, Walmart introduced Express Delivery in April 2021, and in January 2019, it forged partnerships with Point Pickup, Skipcart, AxleHire and Roadie. Additionally, the acquisition of Parcel in September 2017 was a strategic move to elevate its delivery service.
The company’s store and curbside pickup options add to customers’ convenience. As of the second quarter of fiscal 2024, Walmart U.S. had nearly 4,600 pickup locations and more than 4,000 same-day delivery stores. As of Jan 31, 2023, the company had more than 8,100 pickup and nearly 7,000 delivery locations globally.
Taking into account the aforementioned upsides, the supermarket behemoth is well-positioned to continue its growth narrative.
Other Solid Picks
Here we have highlighted three other top-ranked stocks.
Kroger (KR - Free Report) , a renowned grocery retailer, currently carries a Zacks Rank #2. KR has an EPS growth rate of 5.8% for three to five years. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Kroger’s current financial-year EPS suggests an increase of 2.2% from the year-ago reported figure. Kroger has a trailing four-quarter negative earnings surprise of 7.8%, on average.
Ross Stores (ROST - Free Report) currently carries a Zacks Rank #2. This off-price retailer has an expected EPS growth rate of 11.3% for three to five years.
The Zacks Consensus Estimate for Ross Stores’ current financial-year EPS suggests growth of 13.5% from the year-ago reported figure. ROST has a trailing four-quarter negative earnings surprise of 11.5%, on average.
The TJX Companies (TJX - Free Report) has an expected EPS growth rate of 10.8% for three to five years. This off-price retailer holds a Zacks Rank #2 at present.
The Zacks Consensus Estimate for The TJX Companies’ current financial-year EPS suggests growth of 15.4% from the year-ago reported figure. TJX has a trailing four-quarter earnings surprise of 6.6%, on average.