Gearing Up For Holiday Season: Amazon Versus Walmart ETFs

Heading into the crucial holiday season, consumer stocks and retailers have been in the spotlight with two major stocks — Amazon (AMZN - Free Report) and Walmart (WMT - Free Report) — on investors’ radar.

Both stocks are components of Dow Jones Industrial Average, which hit multiple highs lately. Walmart has outperformed Amazon so far this year, having gained 29.1% versus the 16.7% gain for the latter. This is because the mega-retailer seems to be gaining a foothold against the online behemoth as revealed by the latest data from First Insight.

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The frequency of people buying items on Amazon six times or more per month has dropped to 40% this year from 80% in 2017. About 55% have preferred to shop at Walmart this year versus Amazon compared to 47% a year earlier. The percentage of people who favor Amazon has dropped to 40% from about 53% in 2018.

What’s Happening?

Amazon came up with dismal third-quarter 2019 results last month. Though revenues came in better than the Zacks Consensus Estimate, it missed the estimate on earnings. Additionally, earnings fell for the first time in more than two years and the company forecast a further drop in the holiday shopping season. Increased spending on one-day delivery and other initiatives are taking a toll on the company’s profitability and will continue to do so. This is especially true as Amazon has announced a one-day delivery on over 10 million items for Prime members this holiday season. The online giant kicked off with “special, early holiday deals” in early November.

On the other hand, Walmart came up with earnings beat in its third-quarter fiscal 2020 results but fell shy of the consensus mark for revenues. Additionally, the retailer raised the full-year forecast. The big-box retailer kicked off a shorter holiday shopping season in late October by launching online deals earlier than ever and offering free, next-day delivery for the first time.

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