What Does Walmart Have That Amazon Doesn’t?

Walmart is the world’s largest grocer. In 2018, Walmart’s digital food sales increased 53%  compared to 8% on Amazon. Walmart’s total equity is a whopping $79.6 billion dollars, while Amazon’s is $43.55 billion dollars.

Amazon’s $14 billion acquisition of Whole Foods Market in 2017, still struggles to gain share of the food and beverage market, with only an increase of 0.1 percent in 2014 to 1.9 percent in 2019.

Walmart’s food and beverage segment specifically grocery — has been its stronghold which  Amazon has found difficult to penetrate  so far. Whole Foods also has a much higher food price point than items sold at Walmart and in a pandemic shoppers are more likely to shop where they can get the best discounts.

Walmart is also strengthening its online presence to compete with Amazon. And while Amazon may have its share of  e-commerce sales in electronics, books, and clothing, Walmart still leads the race by a hair increasing from $349 billion to $403 billion last year. E-Commerce sales, doubles to about $27.8 billion, roughly doubling the 14 billion they brought in in 2017.

Walmart’s majority-owned Flipkart launches wholesale business to help small businesses in India source directly from manufacturers and producers.

Walmart has entered the health insurance market hiring licensed insurance agents for its new business at the Walmart Health locations

The quarterly earnings press release and presentation will be available at approximately 6:00 a.m. CDT on the date of release. Additionally, a live conference call with the Investment Community will begin at 7:00 a.m. CDT. Source Walmart Investor Relations

Q1 results were significantly affected by the COVID-19 health crisis including higher incremental sales and related costs.

Sales

  • Comp sales increased 10.0% with comp ticket higher by 16.5% while comp transactions declined 5.6%. As a result of the health crisis and related stay-at-home mandates, customers consolidated store shopping trips with larger average baskets and shifted more purchases to eCommerce.
  • E-commerce sales were strong growing 74% and contributed approximately 390 basis points to segment comp sales growth. Store pickup and

delivery, ship to home, ship from store, and marketplace channels were strong throughout the quarter.

  • February comp sales grew 3.8%. In mid-March, stock-up trips surged with March comp sales increasing 15.4%. Store sales slowed during the first

half of April but re-accelerated mid-month as customers spent government stimulus money resulting in a 9.5% April comp sales increase.

  • Q1 strength in food, consumables, and health & wellness was partially offset by softness in discretionary areas such as apparel.
  • Total net sales growth of 10.5% included an approximately 1% benefit from Leap Day sales.
  • Gross profit rate was down 113 basis points due to the carryover of last year’s price investments, crisis-related shifts in sales mix to lower-margin categories and channel mix towards eCommerce, general merchandise markdowns, and temporary closures of Vision Centers and Auto Care Centers.
  • Expenses – Strong sales contributed to operating expense leverage of 89 basis points despite the approximate $670-M of crisis-related incremental costs. Associate investments, wage pressures and increased maintenance costs were partially offset by lower marketing, travel, and consulting costs.
  • Operating income was also affected by a decline in Other Income due to crisis-related temporary closures of in-store tenants and related lost income.
  • Inventory declined 6.1% reflecting higher than normal out-of-stocks in some categories.
  • Format/omni growth
  • We closed 2 Supercenters and 1 Neighborhood Market. We remodeled about 80 stores.
  • As of Q1, we had nearly 3,300 store pickup locations and more than 1,850 stores with same-day grocery delivery. Express Delivery was launched.

In other news, the Californian Court of Appeals court ruled Amazon will be responsible for defective products sold through its marketplace, including 3rd  party sellers who sell on the Amazon platform. If any of these 3rd party sellers start leaving the Amazon website, sales figures could surely change.  3rd party sellers  are up 53% since  Q 2-07 according to Statistica on Amazon’s marketplace.

A California state appellate court followed its federal predecessor in finding Amazon should face product liability claims for defective goods sold on its website by third-party vendors. In a 47-page order, Fourth District of California Judge Patricia Guerrero reversed a finding by Judge Randa Trapp granting summary judgment in favor of Amazon in a product liability case brought by Angela Bolger. Source Courthousenews

Walmart Inc. (NYSE:WMT)’s CEO Doug McMillon has been with Walmart Inc. (NYSE:WMT) since 2014. He is considered the genius who took Walmart to the next level of e-commerce operations and soon in direct competition with Amazon. From 2009 to 2014 he was president and CEO of Walmart Inc. (NYSE:WMT) International. From 2005 to 2009 he served as president and CEO of Sam’s Club.

On a brighter note, Walmart has launched drive in movie theaters in parking lots to let friends and family enjoy amazing movies outdoors in a safe environment. Walmart is dedicated to help us get through the health pandemic of  the  Covid-19 outbreak.

NYSE: WMT    CWEB Analysts view the stock as a long term growth and a great addition to your investment portfolio with an upward momentum of $1000 by 2021 with direct competition to Amazon.

Photo by Morning Brew on Unsplash

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