Wal-Mart Stores Inc (ticker: WMT) has announced its latest aggressive move to fight back against increasing online competition from Amazon.com (AMZN).
This week, Wal-Mart said it will be cutting hundreds of additional jobs and lowering certain online prices, but Wall Street still has mixed feelings about the retail giant’s long-term prospects.
On April 19, Wal-Mart will launch its new pickup discount program, which will offer customers lower prices on roughly 10,000 products they can buy online and then pick up at a local store. The program allows Wal-Mart to pass along the savings it generates from avoiding the “last-mile cost” of delivering products directly to customers’ homes.
At the same time, Wal-Mart is also cutting hundreds more jobs as part of its restructuring and refocusing efforts. Wal-Mart has eliminated about 18,000 company positions in the past year, but a spokesperson says many of the employees who held those positions have been retained and reassigned.
Last week, Telsey Advisory Group analyst Joseph Feldman upgraded Wal-Mart from “market perform” to “outperform” and said the company’s aggressive investments in e-commerce will eventually pay off for shareholders.
“Our forecast for accelerating growth following a few years of heavy investment to improve the core Wal-Mart U.S. and digital businesses should propel the stock higher over the next few years,” Feldman said.
Still, not all long-term investors are convinced that Wal-Mart has done enough to compete with Amazon.
Billionaire Berkshire Hathaway (BRK.A, BRK.B) CEO and Wall Street legend Warren Buffett has sold nearly all of his $3 billion stake in Wal-Mart since mid-2016. Buffett first bought his stake in Wal-Mart back in 2005.
“How many retailers have really sunk and then come back? Not Many. I can’t think of any,” Buffett said of Sears Holdings Corp. (SHLD) back in 2005.
At a shareholder meeting last year, Buffett said Amazon is “a big, big force” that has “already disrupted plenty of people and it will disrupt more.”
Wal-Mart and its stock are holding up surprisingly well in recent years considering the damage Amazon has done to the rest of the U.S. retail sector. The retail sector lost
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