24/7 Wall St.

So far this year, the stock performance of the largest bricks and mortar retailer has handily beaten that of the biggest e-commerce company. In a world in which shoppers are rapidly moving their business online, it is an odd phenomenon. Walmart’s shares are up 28% this year. Amazon’s are higher by only 13%. The S&P is up 24% over the same period.
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For many investors, Walmart’s fortunes seem better. Its same store sales rose 3.2% in the latest quarter, compared with the same period last year. Walmart management forecast more improvement over the holidays. Its online sales continue to power forward at double digits. And, it has an advantage. People can order online and pick up their orders are Walmart stores. On a macro level, consumer confidence is higher and unemployment low. Walmart is so huge, these trends favor it more than any other national retailer.

Amazon has a number of problems it has not faced until recently. Its effort at next day delivery have been very expensive. The service may get it customers, but at what cost? It causes anxiety on Wall St. that CEO Jeff Bezos has started another earnings killing experiment.

Amazon’s two most successful business face challenges. Its Amazon Web Services is the largest cloud business in the U.S. However, its growth has slowed, and observers think its has started to lose share to Microsoft. Amazon’s Prime consumer loyalty program has over 100 million members. One of its core services is streaming media. Its only major competition has been Netflix. However, Apple, Disney, and Warner have aggressively entered the business recently. They have the balance sheets to create original programming, among the keys to getting and keeping new subscribers.

Finally, Amazon is trapped in a movement by the federal and state governments based on the fact that it, Google, and Facebook are too big and strong to allow any real competition. This debate could go on for months, or years, and it is possible Amazon’s expansion in one or more businesses could be curtailed.

Walmart is, once again, the king of American retail.