It’s no secret the U.S. retail industry has been under pressure in 2017. However, Wal-Mart Stores Inc (NYSE: WMT) has been fighting tooth and nail against Amazon.com, Inc. (AMZN) and other competitors, and its latest guidance indicates the company – and WMT stock itself – is holding its own.
On Tuesday morning, Walmart said its sales will grow by about 3 percent in fiscal 2019, with online sales growth surging 40 percent. In addition, Walmart reiterated its full-year 2018 adjusted earnings per share guidance of between $4.30 and $4.40. The company also expects EPS to grow 5 percent in 2019.
Finally, the company announced plans to return an additional $20 billion to its shareholders via WMT stock buybacks.
Walmart stock climbed more than 4 percent on Tuesday following the news.
The new guidance suggests WMT is taking Amazon extremely seriously and strategic online and grocery initiatives seem to be paying off. Walmart also announced it will be adding 1,000 new pickup locations for online grocery orders. Amazon closed its acquisition of Whole Foods in August and immediately began cutting grocery prices.
Walmart has been targeting online sales in recent years, investing roughly a third of its spending budget into its digital strategy. Discounts on online orders and free shipping on purchases of at least $35 have pressured online sales margins but have delivered robust sales growth.
“It is clear that Wal-Mart intends to continue to turn up the heat online,” Moody’s Corp. analyst Charlie O’Shea says, according to Bloomberg. “We still believe Amazon’s lead in online retail is insurmountable; however, Walmart continues to widen the gap between itself and all other brick-and-mortar retailers.”
Morgan Stanley analyst Simeon Gutman says the key number for Walmart is its 5 percent EPS growth target for 2019. Gutman says he expects Walmart stock to “grind higher” as long as it stays on track to hit its 5 percent target.
Despite the SPDR S&P Retail ETF (XRT) being down 6.5 percent overall in 2017, Walmart stock is now up…
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