WMT Stock to Get a Boost from This Move
Wal-Mart Stores, Inc. (NYSE:WMT) has been preparing for this holiday shopping season for a long time.
Early indications are that the brick-and-mortar retail giant may have gotten it right this time. Management had already announced Walmart Cyber Monday deals earlier, and WMT stock has been edging higher on the optimism surrounding the holiday shopping frenzy among consumers.
On Saturday, Adobe Systems Incorporated (NASDAQ:ADBE) released its 2016 online shopping data for Black Friday and Thanksgiving Day. The data threw light on the important fact that Black Friday 2016 became the first day in retail history in which mobile revenue broke the $1.0 billion barrier, bringing in $1.2 billion, which was 33% growth year-over-year. More than $5.0 billion was spent online by the end of Black Friday, a 17.7% increase year-over-year. (Source: “Media Alert: Adobe Data Shows Black Friday Breaks Online Sales Record With $3.34 Billion,” Adobe Systems Incorporated, November 26, 2016.)
This points to the significance of having a strong digital platform for traditional retailers. Walmart Cyber Monday deals are a reflection of this changing trend. This is also something that Wal-Mart Stores, Inc. realized a little late. But the company has been aggressively pursuing its e-commerce strategy to take on its rival Amazon.com, Inc. (NASDAQ:AMZN).
The company also acquired Jet.com, Inc. for $3.3 billion in September. The web retailer would help Wal-Mart Stores, Inc. boost its e-commerce operations. This was significant as the bulk of consumers have shifted to shopping online instead of going to traditional brick-and-mortar stores.
The changing strategy has been working for the company, and Walmart stock has achieved almost 19% in returns year-to-date, as compared to about 10% in returns by the S&P 500.
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Walmart Cyber Monday Deals 2016
Last Monday, the company announced that it will offer its largest Cyber Week assortment ever. Walmart kicked off the event the day after Thanksgiving with Cyber Week online specials, featuring surprising new brands and unbeatable prices that would be available starting Friday, November 25.
Wal-Mart Stores had already tripled its online product assortment this year from eight million to more than 23 million items in preparation for Walmart Cyber Monday and Cyber Week.
Steve Breen, senior vice president of merchandising for Walmart.com said, “By tripling our online product assortment, we are able to offer a lot more new brands and choices to customers all season long.” (Source: “Walmart’s Significantly Expanded Assortment Brings More Choices for Customers and the Largest Cyber Week Event, Earlier than Ever,” Wal-Mart Stores, Inc., November 21, 2016.)
Walmart Cyber Deals are across a wide variety of electronic products. From smart TVs and laptops to gaming consoles and “Google Home,” the company is not leaving any stone unturned to woo customers either online or into its stores.
Walmart Stock to Gain from Investments
Walmart had been spending heavily to strengthen its digital platform and improve its stores. This has impacted the profits for the short term, however, it is likely to pay off in the long run. In the latest quarterly results, it became clear that the e-commerce investments have started showing results.
The traffic was also looking up, and this has improved the same-store sales. The company also made invesments in a Chinese on-demand logistics and grocery e-commerce platform, New Dada. For Walmart Cyber Monday and the coming holiday season, the company has tried to strengthen its logistics.
Walmart’s share price fell after posting mixed third-quarter results. However, analysts are optimistic that the retail giant’s efforts to compete with the e-commerce juggernaut, Amazon, will pay off. Barclays PLC is rating Walmart stock as “overweight,” and Baird analysts maintain an “outperform” rating on WMT stock.
The company’s e-commerce sales strategy is the growth catalyst that will keep the Walmart stock price buoyant in the coming days.