It seemed that the shares of Walmart Inc. (NYSE: WMT) were on the right track after its most recent earnings report. Same-store sales improved and its e-commerce efforts showed a pulse. However, a look at the stock through three quarters shows it is down 5%. On the other hand, shares of its primary rival Amazon.com Inc. (NASDAQ: AMZN) are higher an extraordinary 68%. It shows how little Wall Street buys into Walmart’s longtime strategies.
In the most recently reported quarter, Walmart’s U.S. same-store sales rose 4.5%, the best performance in 10 years. More important, on a forward-looking basis, for the balance of fiscal 2019, Walmart expects that U.S. e-commerce sales will be up 40%. Many investors took the e-commerce numbers as finally showing that the world’s largest retailer had some success with its transformation to an online presence and could mount a charge against Amazon.
However, Amazon answered Walmart’s numbers with earnings that showed a 43% increase in North American sales to $32.2 billion.
Walmart also lacks the huge portfolio of products and services Amazon has. It has increased its competition against Walmart’s critical grocery business with the buyout of Whole Foods and a number of promotions to bring in new customers to the new division.
Amazon also has its Prime service, which has over 100 million members. Research shows these members are much more likely to buy products from Amazon than customers who are not part of the subscription service. Amazon has put together a number of enticements to bring people to Prime and keep them. This includes a movie streaming service and free shipping.
And Amazon has a portfolio of consumer electronic devices, led by its Alexa-powered home assistant devices. These have been an unqualified success.
Amazon also has an ace in the hole, based on investor perception. Its Amazon Web Services cloud business is the largest in the world and is growing rapidly and highly profitable. Walmart is not in any other business beyond retail.
Walmart’s good quarter has been buried by Amazon’s success.