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Walmart (WMT) Fuels Growth With InHome Delivery Expansion

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Walmart Inc. (WMT - Free Report) has been focused on enriching customers’ experiences through better e-commerce options, especially enhanced delivery services. The omnichannel retailer has unveiled plans to expand its InHome delivery service to 30 million U.S. households from six million households. The expansion is expected by the end of this year.

In connection with this, the supermarket giant intends to appoint more than 3,000 associate delivery drivers this year to support the planned delivery expansion. Also, it plans to establish a fleet of 100% all-electric delivery vans. The associate delivery drivers are entitled to an additional $1.50 per hour pay for most of the existing store jobs alongside being eligible for the company’s total rewards and benefit plans.

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InHome Delivery to Bolster Walmart’s E-Commerce Growth

InHome delivery service, originally launched in 2019, is aimed at leveraging extremely trained workers to deliver fresh groceries and everyday essentials among other items directly to customers’ houses. It is also used for picking up Walmart.com returns. The service has been operating in selective markets over the past two years and has been doing well. Extending it to more consumers in 2022 is likely to aid Walmart’s e-commerce growth.  

Walmart has long been taking robust strides to strengthen its delivery arm. The company recently started commercializing its countrywide delivery capacities via Walmart GoLocal. Also, the company’s investment in DroneUp, a pilot with HomeValet, the introduction of Carrier Pickup by FedEx, the launch of Walmart+ membership program, drone delivery pilots in the United States with Flytrex and Zipline and a pilot with Cruise to test grocery delivery through self-driven all-electric cars underscore its efforts to boost the delivery game.

Earlier, the company unveiled Express Delivery, joined forces with Point Pickup, Roadie and Postmates alongside acquiring Parcel to enhance its delivery service. Walmart’s Express Delivery service is quite popular among the U.S. population. Also, WMT’s store and curbside pickup options add to customers’ convenience. As of the third quarter of fiscal 2022, Walmart U.S. had 4,300 pickup locations and 3,300 same-day delivery stores.

Walmart’s delivery service is a vital factor that is driving its e-commerce sales. Walmart’s e-commerce business and omnichannel penetration have been increasing amid pandemic-led social distancing. The company has been taking several e-commerce initiatives, including buyouts, alliances, and improved delivery and payment systems. In the third quarter of fiscal 2022, U.S. e-commerce sales rose 8% and soared 87% on a two-year stack basis. At Sam’s Club, e-commerce sales jumped 32% due to a robust direct-to-home show and solid curbside performance. In the International segment, e-commerce sales advanced 33% on a constant currency basis, with growth in China, Flipkart and Mexico.

These moves, like the abovementioned expansion of InHome delivery, are likely to fuel further growth at Walmart. Shares of this Zacks Rank #3 (Hold) company have risen 3.1% in the past three months compared with the industry’s growth of 5.7%.

3 Solid Retail Picks

Some better-ranked stocks from the retail space are Ulta Beauty (ULTA - Free Report) , Costco (COST - Free Report) and Target (TGT - Free Report) .

Ulta Beauty, a beauty products retailer in the United States, currently sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter earnings surprise of nearly 76%, on average. Shares of Ulta Beauty have surged 13.8% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
 
The Zacks Consensus Estimate for Ulta Beauty’s fiscal 2022 sales and earnings suggests growth of 6.9% and nearly 5%, respectively, from the year-ago reading. ULTA has an expected EPS growth rate of 16.5% for three-five years.

Costco, a general merchandise retailer, has a Zacks Rank #2 (Buy) at present. The stock has jumped 25.6% in the past three months.
 
The Zacks Consensus Estimate for Costco’s fiscal 2022 sales and earnings per share (EPS) suggests growth of 10.7% and 13.2%, respectively, from the year-ago period’s corresponding figures. COST has a trailing four-quarter earnings surprise of 8.3%, on average.

Target, a renowned omnichannel retailer, presently carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 19.7%, on average. The stock has rallied 3.2% in the past three months.

The Zacks Consensus Estimate for Target’s fiscal 2022 sales and EPS suggests growth of 2.3% and 0.1%, respectively, from the corresponding year-ago levels. TGT has an expected EPS growth rate of 14.4% for three to five years.