Wal-Mart Stores Inc.’s (NYSE: WMT) share price has had a good run this year. Up over 13%, it has outperformed the Dow Jones Industrial Average, of which it is a component. However, rival Amazon.com Inc.’s (NASDAQ: AMZN) shares have jumped 32% over the same period.
Walmart had a strong run in the first half of the year. The stock’s price has leveled off since then. Amazon’s have leveled during the period as well. The retail sector has fallen out of favor, based on small margins, even at Amazon. The two behemoths can still count themselves among the strong performers in the sector. Shares of Macy’s Inc. (NYSE: M) are down 37% this year. J.C. Penney Co. Inc.’s (NYSE: JCP) stock is off 49%.
The Walmart advance is an example of the extent to which share prices of the “haves” and “have-nots” are diverging, even if it trails Amazon’s performance. Walmart’s sales in the United States have been stronger than most of its smaller rivals. Its forays into e-commerce show it is willing to spend billions of dollars to strengthen its online sales. Walmart spent $3 billion on Jet.com last year. In the meantime, it has bought smaller online operations Shoebuy and Hayneedle. Experts believe Walmart is willing to invest billions more to bolster its e-commerce operations. Walmart.com is already the second most visited e-commerce website in the country.
Amazon has been helped by its size. However, its rolling innovation may impress Wall Street more. Its third-quarter margins were extremely thin. Without its Amazon Web Services cloud business, it would have made nothing. Investors continue to be impressed by the loyal audience Amazon has built around its streaming media and free shipping service Prime, which tethers tens of millions of customers to the company. Prime members buy more merchandise than other customers on Amazon each year, according to research about the service.
The stock market has set a hierarchy of retail company prospects in the United States. Walmart is an unusually big winner. That has not been enough to put its performance above Amazon’s.