Four distinct forces probably contributed to Walmart Inc’s (NYSE: WMT) disappointing results and guidance, as well as the slowdown in the growth of its e-commerce sales. None of these forces is likely to decelerate any time in the near-term. Consequently, Walmart’s results will probably continue to be lackluster or worse going forward.
Meanwhile, the valuation of WMT stock is still high compared to that of other major retailers. That’s despite the retreat of Walmart stock in the wake of the results. Consequently, investors should sell their WMT stock.
While shopping at a Target Corporation (NYSE: TGT) store in northern Virginia on Monday night, I learned that Target is allowing consumers to buy products in its stores for the same prices that a number of its competitors, including WMT, are charging online. This policy has been in place at Target for some time. However, I never heard of it, even though I shop at Target once every two or three months.
Indeed, I only learned about the policy because on Monday I saw someone using it. A customer ahead of me in Target’s checkout line took out his phone and got a significant discount by showing the cashier that Walmart was charging about 30% less than Target had displayed. I received a discount of about 50% on the laptop case I purchased by showing the cashier the price that Walmart was charging for the same product.
Like me, many consumers have probably only learned recently about Target’s price-matching policy. It’s very possible that many such customers who had previously shopped at Walmart for its low prices have now switched to Target. The latter company has superior service and better in-store ambience. Since more customers will probably learn about the policy going forward, this negative catalyst will in all likelihood intensify in coming quarters.
