Hey Walmart, Amazon Is Now Bigger Than You
Walmart (WMT) just got smaller than Amazon (AMZN) as Amazon.com's giant gain has pushed its market cap to $265 Billion, leaving the retailer now $30 Billion below in profit.
"We had a solid first quarter. We took some important strategic steps to strengthen the foundation of our business for the future. We need to continue to get better at consistently running great stores, clubs and e-commerce everywhere we operate...and we are," CEO Doug McMillon said in the company's first quarter statement.
It was a sad day for the retailer on Thursday, as Amazon's market capitalization skyrocketed by $40 billion, to around $265 billion, leaving Walmart behind at $234 billion.
Although Amazon has shown strong quarter results, Walmart still remains a retail giant.
I view Walmart's strategy still one to beat Amazon's even though the retailer's growth rate against Amazon lags.
Being Amazon is Walmart's biggest competition, Walmart proved during the first annual Prime Day that it can produce pretty special deals on its own. Yahoo Finance released a rank of each retailer in 4 categories, in effort to determine the winner. In their estimation, Walmart crushed Amazon, by a score of 14 to 8 (20 being the highest).
The BusinessWeek report indicated a good point in which Amazon grew 41% in the last fiscal year to $48.1 billion, over five times faster than Walmart's 8% increase. Walmart's online sales were less than 2% of its $264 billion in U.S. revenue in 2011. Walmart has a fair chance at fighting back through winning over consumers.
Continuing operations was $1.03 during the first quarter within guidance of $0.95 to $1.10. Currency negatively impacted EPS by approximately $0.03. Walmart U.S. 1.1% comp includes positive traffic for the second consecutive quarter. Customer experience scores improved in all formats.
Walmart's customers benefited from lower gas prices. E-commerce sales globally increased approximately 17%. Consolidated operating income declined 8.3%, due to impacts from currency fluctuations and investments in associate wages & training and e-commerce.
Investors can still profit by buying Walmart.
In the battle for online customers, Walmart has an edge over other retailers. Wal-Mart can capitalize on middle class consumers who typically will visit a Wal-Mart and shop online or comparison shop between its brick and retail store for the best prices.
The retailer is betting big on its strategy. According Walmart's business and strategy, price, access, assortment and experience drive a customer's choice of retailer. Historically, Walmart led on price and assortment. Retail environments are more competitive today, especially with e-commerce. To win, Walmart will lead on price, invest to differentiate on access, be competitive on assortment & deliver a great experience.
Walmart will always be shareholder-friendly. With over one billion transactions conducted daily, the retailer has generated 60% of total net sales in fiscal 2015. Walmart U.S. has historically contributed the greatest amount to the Company's net sales and operating income.
Will Walmart win this battle once and for good?