Looks like Wal-Mart Stores Inc. (WMT - Analyst Report) is going to leave no stones unturned in its efforts to improve customer service and experience. The company has recently expanded its relationship with Chase, the U.S. consumer and commercial banking business of JPMorgan Chase & Co. (JPM - Analyst Report) , to process payments through ChaseNet at more than 5,000 Walmart and Sam’s Club locations in the U.S. and the Sam’s Club e-commerce website.
ChaseNet is JPMorgan’s closed-loop network, which already processes payments for Walmart’s e-commerce channel. With the help of ChaseNet, businesses get guaranteed fixed-rate pricing for Chase Visa credit and debit payments under the term of the latest contract.
The partnership marks the strengthening of the relationship between ChaseNet and Wal-Mart, which was previously confined to Walmart’s e-commerce processing. It would also help lower interchange payments for Wal-Mart, which presently pays significant card fees annually. ChaseNet provides fixed-rate and often discounted interchange pricing on eligible cards, which will reduce the fee payment on a number of purchases.
We note that Bentonville, AR-based Wal-Mart has been making efforts to better understand and address the evolving needs of customers to regain their confidence, and thus boost sales.
The company has been investing in e-commerce activities to dominate ecommerce king, Amazon.com, Inc. (AMZN - Analyst Report) . The company is also paying its workers more and training them to improve its stores’ performance. Wal-Mart being the largest private employer in the U.S. with 2.2 million staff, has pledged to invest $2.7 billion in raising wages and providing extra training in fiscal 2017. Under the initiative, the company raised its minimum wage to $9 an hour in Apr 2015, and then to $10 per hour in Feb 2016.
Wal-Mart is seeing positive comps at Wal-Mart U.S. for the past eight quarters, after delivering negative comps since the third quarter of fiscal 2013. Traffic improved for seven consecutive quarters, owing to the company’s efforts to modernize its stores to boost traffic. Traffic also increased due to moderate improvement in consumer spending. The lower gas prices have eased consumer spending power a bit, the impact of which is seen in improved traffic at stores.
Despite posting improving results, Wal-Mart is facing several challenges. It is facing intense competition on all fronts, ranging from dollar stores to the traditional grocery store chains and online business. Its international operations are also under pressure with a stronger dollar eating into sales. Wal-Mart also expects to incur huge e-commerce expenses over the near term.
Wal-Mart currently carries a Zacks Rank #3 (Hold). However, a better-ranked retailer includes Tilly's, Inc. (TLYS - Snapshot Report) , which delivered an average positive earnings surprise of 73.74% over the trailing four quarters and has a long-term earnings growth rate of 15.50%.
Tilly’s sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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