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Walmart (WMT) U.S. E-Commerce CEO Steps Down, Stock Declines

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Shares of Walmart Inc. (WMT - Free Report) slid 1.6% on Jan 15 as the executive vice president, president and chief executive officer of its U.S. e-commerce business, Marc Lore, unveiled his intention to step down from the roles, with effect from Jan 31, 2020. Nonetheless, Lore will continue to serve the company as a strategic advisor till September 2021.

Markedly, Lore was appointed in September 2016, as part of Walmart’s buyout of Jet.com, which was unified with Walmart.com. Jet.com was founded by Lore, who has led several other e-commerce and internet firms in the past such as Quidsi and The Pit, Inc. Walmart, however, wound up Jet.com last year.

Incidentally, Walmart has merged its store and e-commerce teams over the past two years, which helps it deliver a one-brand experience to its customers. The process was concluded in 2020, thanks to which its Walmart U.S. segment has been operating as an omnichannel business. Notably, U.S. e-commerce sales soared 79% in the third quarter with strength across all channels, including robust traffic at Walmart.com. Markedly, marketplace and pickup & delivery sales jumped at a triple-digit rate. The company’s U.S. business will continue to report under John Furner, after Lore’s retirement.

Walmart has strengthened its e-commerce business, which has been performing quite well under Lore’s guidance. The company has enhanced its pickup and delivery options, expanded assortments and improved its website over the years. These upsides have been helping the company stay firm against the rising competition from Amazon (AMZN - Free Report) and are also likely to continue helping it cater to the burgeoning online demand amid the pandemic.

Walmart Continues to Bolster E-Commerce Game

Walmart’s e-commerce business and omnichannel penetration have been growing, all the more amid the pandemic-led social distancing. Further, management expects these trends to stay even after the current crisis dissipates. The company, on its third-quarter earnings call, said that it has doubled the U.S. store associate count this year, supporting the company’s digital and omnichannel efforts. Certainly, Walmart’s combination of a robust store network and growing digital capacity is likely to keep it in good shape.

The company has been taking several e-commerce initiatives, including buyouts, alliances, and improved delivery and payment systems. During the third quarter of fiscal 2021, Walmart unveiled an additional investment in India’s Ninjacart, for technology and supply-chain solutions. Apart from these, the company’s contracts with Goldman Sachs (GS - Free Report) and Shopify (SHOP - Free Report) ; buyouts of ShoeBuy, Moosejaw and Bonobos, among others, are noteworthy. Further, the buyout of a major stake in Flipkart has been bolstering its International segment.

Additionally, Walmart is making aggressive efforts to expand in the booming online grocery space, which has long been a major contributor to e-commerce sales. In the third quarter of fiscal 2021, the company took robust strides to strengthen its delivery arm, as evident from its launch of the Walmart + membership program; drone delivery pilots in the United States with Flytrex, Zipline and DroneUp; and a pilot with Cruise to test grocery delivery through self-driven all-electric cars. It also unveiled an alliance with Door Dash to deliver prescriptions from pharmacies of Sam’s Club, alongside expanding Scan & Go to all fuel stations at U.S. Sam’s Clubs. Prior to this, Walmart unveiled Express Delivery during the first quarter at several stores, which helps it deliver orders to customers in less than two hours.

We believe that with such a strongly established omnichannel business, Walmart is likely to keep its splendid show on. This Zacks Rank #2 (Buy) stock has rallied 25.8% in a year compared with the industry’s rise of 24.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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