Media Moves

Coverage: WalMart beats Wall Street, predicts big holiday season

November 17, 2017

Posted by Chris Roush

walmart_logoWalmart beat Wall Street forecasts for sales and profit on Thursday and improved its forecast for holiday shopping, sending its stock up nearly 11 percent to an all-time high.

Paul R. La Monica of CNNMoney.com had the news:

Walmart, which owns Jet.com, ModCloth, Bonobos, Moosejaw and several other shopping sites, said its digital sales rose a stunning 50% in the United States during the third quarter.

That’s more than double the growth rate that Target just posted for online sales. It’s higher than Amazon’s growth rate for revenue, too.

Walmart has made a big bet on digital.

It recently bought Parcel, a logistics startup that will allow Walmart to launch same-day delivery services for online purchases in New York City.

It’s working with the smart-lock company August Home on a test program that will let you order food from Walmart and have the delivery people come and put it away in your fridge.

Myles Udland of Yahoo Finance reported that Walmart’s success showed why Amazon needed to buy Whole Foods:

And the success that Walmart is seeing in both its online business and grocery segments illustrates some of the strategic impetus behind 2017’s most high-profile acquisition — Amazon buying Whole Foods.

Back in June, Amazon acquired the high-end grocer for $14 billion, the company’s biggest acquisition ever. The basic outline of why Amazon bought Whole Foods is fairly straightforward — the company got hundreds of grocery stores located in high-income zip codes which could jumpstart its lagging grocery business, with these stores also serving as small warehouses to help its last-mile delivery operations.

After the deal closed, Amazon slashed prices on a number of items at Whole Foods, which led to an immediate increase in foot traffic, according to data from Thasos Group. This data also showed that many of these new customers came primarily from Walmart, which accounted for almost a quarter of Whole Foods’ increase in the week following these new lower-priced initiatives.

The success of Walmart in the wake of these customer shifts and Amazon’s new push in groceries, however, shows why Amazon felt the need to go compete on Walmart’s turf when the dynamic between these companies has largely been the inverse. And this offers another explanation for the strategy behind Amazon’s Whole Foods buy — Amazon did not buy Whole Foods because it wanted to be in the grocery business, but because it wanted to be in the physical retail business.

Hayley Peterson of Business Insider reported that Walmart is betting against the middle class:

At the same time, Walmart appears to be maintaining loyalty among customers at the opposite end of the income spectrum by keeping prices competitive and adding new in-store discounts that its rivals — most notably Amazon — will have a hard time beating.

“Walmart continues executing well in a generally solid US consumer environment with the combination of offensive marke- share gaining moves and defensive inventory and pricing execution,” Cowen & Co. analyst Oliver Chen wrote in a recent note to clients.

Walmart’s strategy puts less emphasis than ever before on a group that was once it’s prime target: the middle class, according to Stephens.

“In the 1960s, retailers couldn’t keep up with the growth of the middle class,” Stephens said. “Wages were growing, families were growing, and people were moving out to the suburbs. That played very well into Walmart’s playbook.”

 

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