Walmart’s sales rose as a result of the execution of a unified commerce strategy that integrates online and offline sales; consequently, its stock price hit a 52-week high.
Sales and operating income were led higher by a 27 percent jump in global e-commerce sales and a 28 percent rise in the worldwide advertising business, including 26 percent for Walmart Connect in the United States.
Wall Street reacted positively to Walmart’s report, sending its shares sharply higher, to a new high in the regular early-morning trading session. The company’s shares have gained 66 percent for the year, compared with 24 percent of the benchmark S&P 50 Index.
Walmart has been using its extensive network of physical stores to take advantage of a new emerging trend: unified retailing. This trend combines online and offline sales, integrating all channels and customer interaction points.
This retail model, introduced by Chinese e-commerce company Alibaba in 2014, enables retailers to consistently interact with customers and provide expedient, personalized, and convenient experiences, ultimately enhancing customer satisfaction, loyalty, and business growth.
For instance, Walmart’s customers can order merchandise online and pick it up from a local company store or have it shipped to them for same-day delivery.
Walmart CEO Doug McMillon said in a comment following the third-quarter financial report: “In the U.S., in-store volumes grew, pick up from store grew faster, and delivery from store grew even faster than that. Our teams are executing and delighting our customers and members with the value and convenience they expect from Walmart.”
McMillon’s third-quarter message echoes a similar one that he made following the release of the second-quarter financial results.
“Each part of our business is growing—store and club sales are up, e-commerce is compounding as we layer on pickup and even faster growth in delivery as our speed improves,” he said at the time. “Our newer businesses, like marketplace, advertising, and membership, are also contributing, diversifying our profits, and reinforcing the resilience of our business model.”
To develop this model, Walmart spent generously, recruiting and retaining top software-development talent. It also acquired digital properties to expand its online sales scale and scope and developed its version of Amazon’s Prime program.
The retail giant launched Walmart Connect, a digital advertising platform that enables advertisers to access Walmart’s online properties, including its website, mobile app, and other digital channels, and target the company’s large customer base.
More recently, Walmart acquired Vizio Holding Corp. to further accelerate Walmart Connect in the United States.
“Offering unmatched value, convenience, and assortment, Walmart (WMT) continues to outperform most retailers, even attracting upper-income shoppers from competitors and gaining share in this cohort,” Carol Levenson, director of research at Gimme Credit, said in a research note.
“With overall low prices and Walmart+ subscriptions, Walmart is meeting needs on both ends, and their focus on e-commerce and improving the omnichannel shopping experience will continue to pay dividends,” Greg Zakowicz, senior e-commerce expert at Omnisend, said in an email to The Epoch Times.
Quo Vadis Capital President John Zolidis, who closely follows the retail sector, provided further insight into Walmart’s business model.
“WMT is taking share, executing well, and benefiting from its scale,” he said in a research note. “The company is also poised to post two consecutive years of [earnings before interest and taxes] margin expansion for the first time in more than two decades [excluding during the COVID-19 pandemic] thanks in part to its investment in ‘alternative profit pools.’”
Still, Zolidis is skeptical of Walmart’s market valuation, with shares trading at a 10-year peak of 31 times the price-to-earnings ratio on fiscal year 2025.
“While momentum may carry the shares higher, we believe the stock is rich relative to its earnings growth, which remains modest [at less than 10 percent in FY 2023 and FY 2024],” he said.
“Looking forward, the Street thinks WMT will start to bring more to the bottom line in future years (estimating [earnings per share] growth of [about 12 percent in FY 2025 and FY 2026]), but even with this expected acceleration, we find it difficult to justify the current valuation.”
