Walmart Inc.
WMT
is committed to enhancing its virtual reality technology to transform the retail experience for its customers and members. The retail behemoth signed an agreement to acquire Memomi — an augmented reality (AR) optical tech company. The move is in sync with Walmart’s efforts to boost frictionless and omnichannel optical care. Management expects to conclude the acquisition in the coming weeks.
Memomi provides technology to help customers “try on” eyewear virtually in real-time for a convenient and quick omnichannel experience. Management highlighted that, Memomi has aided digital measurements for Walmart and Sam’s Optical customers in over 2,800 Walmart Vision Centers and 550 Sam’s Clubs since 2019. Memomi also supported the Optical e-commerce experience on SamsClub.com since that time.
The latest move to acquire Memomi will further help Walmart in offering personalized and economic access to optical care. The envisioned buyout will accelerate WMT’s Health & Wellness mission to provide integrated omnichannel healthcare while leveraging data and technology to enhance outcomes, engagement and health equity.
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Robust E-Commerce Initiatives
Walmart’s e-commerce business and omni-channel penetration have been increasing. From fiscal 2021 beginning till fiscal 2022 end, the company’s digital sales, as a percentage of sales, increased from 6% to 13%. The company has taken several e-commerce initiatives, including buyouts, alliances, and improved delivery and payment systems. The company is innovating in the supply chain, adding capacity and building businesses such as Walmart GoLocal, Walmart Connect, Walmart Luminate, Walmart+, Spark Delivery, Marketplace, and Walmart Fulfillment Services. U.S. e-commerce sales rose 1% in the first quarter and soared 38% on a two-year stack basis. The company is witnessing rapid growth in advertising income. At Sam’s Club, e-commerce sales jumped 22% due to a robust direct-to-home show and solid curbside performance. In the International segment, e-commerce sales advanced by 22% on a constant-currency basis. Additionally, Walmart is aggressivelyexpanding in the booming online grocery space, which has long been a major contributor to e-commerce sales.
Wrapping Up
The industry is currently grappling with supply-chain bottlenecks and Walmart is not fully immune to these headwinds. The Zacks Rank #5 (Strong Sell) company posted soft first-quarter fiscal 2023 earnings as it battled supply-chain bottlenecks, escalated costs and persistently elevated inflation. The company’s consolidated gross profit margin contracted by 87 basis points (bps), primarily due to Sam’s Club, wherein the gross margin fell 219 bps. This was attributable to supply-chain costs, a fuel mix, inflation and markdowns stemming from the delayed inventory. Management expects the gross margin to remain under pressure in the second quarter, though it will likely improve sequentially.
WMT’s stock has declined 15.7% in the past six months compared with the
industry
’s 13.3% fall.
3 Solid Retail Picks
Here are some better-ranked stocks –
Kroger Co.
KR
,
Dillard’s, Inc.
DDS
and
Dollar Tree
DLTR
.
Kroger, a renowned grocery retailer, sports a Zacks Rank #1 (Strong Buy). Kroger has a trailing four-quarter earnings surprise of 20.3%, on average. KR has an expected EPS growth rate of 11.3% for three to five years. You can see
the complete list of today’s Zacks #1 Rank stocks here
.
The Zacks Consensus Estimate for Kroger’s current financial-year sales and earnings per share suggests growth of 6.7% and 6.3%, respectively, from the year-ago period.
Dillard’s, which operates retail department stores, sports a Zacks Rank #1. DDS has a trailing four-quarter earnings surprise of 224.1%, on average.
The Zacks Consensus Estimate for Dillard’s current financial-year sales suggests growth of 6.1% from the year-ago period. DDS has an expected EPS growth rate of 14.6% for three to five years.
Dollar Tree, a discount variety retail store operator, sports a Zacks Rank #1. DLTR has an expected EPS growth rate of 15.5% for three to five years.
The Zacks Consensus Estimate for Dollar Tree’s current financial-year sales suggests growth of 6.7% from the year-ago period. DLTR has a trailing four-quarter earnings surprise of 13.1%, on average.
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