With the holiday season wrapping up and Amazon (NASDAQ:AMZN) getting all the attention, it’s easy to discount (no pun intended) the importance of old stalwarts like Walmart (NYSE:WMT) stock. Besides, the shares’ recent price action could put even the most excitable commentators to sleep.
However, I feel it’s a mistake to let the allure of another blockbuster online-retail season deflect your attention from a perfectly good investment. Walmart stock could actually be in the midst of a low-key consolidation period — and the next phase could surprise some of you jaded traders out there.
The Grinch Who Stole Retail Christmas
It’s no secret that the lion’s share of American holiday-season sales were taken by e-commerce. Actually, you may as well go ahead and replace the word e-commerce with Amazon in that last sentence, since that’s where everybody and his uncle shops online nowadays. Heck, my mother’s 89 years old and she shopped on Amazon for Hanukkah (albeit with my unwaveringly patient tech support).
Indubitably, then, Amazon played a major role in the success of 2019’s holiday season. And indeed it was successful, posting a 3.4% year-over-year gain in non-automotive retail sales from Nov. 1 through Dec. 24. Shouldn’t it stand to reason, then, that there’s enough holiday cheer for everyone in the retail sector?
Evidently not. When the dust settled, non-store retailers (again, that phrase is pronounced “A-ma-zon”) posted a 12.1% increase in sales while department-store sales declined by 5.4%. Moreover, 9,300 retail store locations closed down from Jan. 1 through Dec. 20 — a markedly worse result than last year’s closing of 6,000 retail stores.
Some Hope for WMT Stock Investors
Interestingly, though, the WMT stock price has managed to stay afloat during this latest episode of the retail-pocalypse. In fact, from mid-October to late December, Walmart stock shares have pretty much gone nowhere — not the worst possible result, to be sure, and patient shareholders have at least been able to collect a dividend payment along the way.
Dividend payments help us to stay calm during patience-testing periods like this – and so does a bit of perspective. After all, with WMT stock up around 29% year-to-date and having more than doubled since its 2016 medium-term low, shareholders can still partake of the holiday spirit.
Besides, it’s not as if Walmart’s taking the Amazon threat lying down. In an e-mail to InvestorPlace, Lisa Sims, Assistant Professor of Web/Mobile Technology at Ashford University, said, “Walmart is making it easy for busy consumers to shop without compromising their schedules.” She duly observed Walmart’s proactive strategy in battling the online Goliath:
“With so much competition in the e-commerce space from Amazon, Walmart has learned how to adopt and compete. Walmart offers free shipping on orders over $35 and items can be delivered in two days or picked up in store (sometimes for a discount) to avoid shipping costs for orders under $35. Walmart also uses its mobile app to capture those mobile users and user notifications to alert them of rollbacks and other deals. For those consumers who don’t want to grocery shop in the Walmart stores, the mobile Grocery app allows them to place their orders via the app and either schedule a time to pickup the groceries or have the groceries delivered for a fee. … Walmart also makes it easy to return items ordered online via their mobile app so when consumers arrive at the store, the sales associates can scan the mobile app bar code to make the returns faster and easier. Lastly, Walmart is also offering ebooks to compete with Amazon to make consumers give them a second.”
Astute readers might claim that in order to adapt to the Amazon era, Walmart is effectively becoming Amazon in some respects. Personally I don’t have any problem with that; if a measure of imitation is what it takes to reclaim some market share — and some investor confidence — so be it, I say.
The Takeaway on Walmart Stock
When you unpack the non-movement in WMT stock and realize that shareholders could have done a whole lot worse than they actually did, there’s really nothing boring about Walmart right now. If anything, I consider the current share price to be a holiday sale on Walmart stock – not to be given as a gift, but to be bought, held, and profited from eventually.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.
