Walmart's Additional Stake In Flipkart To Fuel E-commerce?

Walmart Inc. (WMT) has been making successive efforts to strengthen its e-commerce operations in the United States and internationally. The omnichannel retailer, which had invested in Flipkart in 2018, has acquired Tiger Global's stake in the abovementioned Indian e-commerce platform, as revealed by sources.

Apparently, Walmart has paid $1.4 billion for Tiger Global's stake in Flipkart, valuing Flipkart at $35 billion. The move underscores Walmart’s confidence in the prospects of Flipkart as well as the Indian market.

In the first quarter of fiscal 2024, Walmart’s International segment net sales grew 12.9% at constant currency, driven by double-digit growth in Flipkart, Walmex and China. Segment e-commerce sales jumped 25% on store-fulfilled and advertising strength. On its first-quarter earnings call, management stated that both Flipkart and PhonePe were doing well, keeping WMT encouraged about opportunities in the Indian market.

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Walmart’s e-commerce business and omnichannel penetration have been increasing.  This Zacks Rank #2 (Buy) company’s global e-commerce sales form more than 13% of its sales as of the end of fiscal 2023. Walmart has been taking several e-commerce initiatives, including buyouts, alliances, and improved delivery and payment systems.

The company is innovating in the supply chain and adding capacity and building businesses, such as Walmart GoLocal, Walmart Connect, Walmart Luminate, Walmart+, Spark Delivery, Marketplace and Walmart Fulfillment Services. In the first quarter of fiscal 2024, e-commerce sales surged 26% globally on omnichannel strength, including pickup and delivery.

Moreover, U.S. e-commerce sales rose 27%, driven by strength in pickup & delivery and advertising. At Sam’s Club, e-commerce sales jumped 19% on strong curbside performances.

Walmart’s other notable strides include the acquisition of Zeekit, which is focused on uniting fashion and technology via its virtual fitting room platform. Apart from this, the company’s investment in Ninjacart, contracts with Symbotic, Shopify, Green Dot and Microsoft and the buyouts of ShoeBuy, Moosejaw and Bonobos, among others, underscore its digital efforts. Additionally, WMT is making aggressive efforts to expand in the booming online grocery space, which has long been a major contributor to e-commerce sales.

Walmart has taken robust strides to strengthen its delivery arm, as evidenced by its partnership with Salesforce, the expansion of the InHome delivery service, investments in DroneUp, a pilot with HomeValet, the introduction of Carrier Pickup by FedEx, the launch of the Walmart+ membership program, drone delivery pilots in the United States with Flytrex and Zipline, and a pilot with Cruise to test grocery delivery through self-driven all-electric cars.

Prior to this, Walmart unveiled Express Delivery and joined forces with Point Pickup, Roadie and Postmates, alongside acquiring Parcel to enhance its delivery service. Furthermore, the company’s store and curbside pickup options add to customers’ convenience. As of the first quarter of fiscal 2024, Walmart U.S. had 4,600 pickup locations and more than 3,900 same-day delivery stores.

Walmart’s increased stake in Flipkart is likely to further bolster the former’s e-commerce business. Shares of this supermarket giant have rallied 11.1% in the past six months compared with the industry’s growth of 10.6%.

 

Other Promising Stocks

Abercrombie & Fitch (ANF) , which operates as a specialty retailer, currently sports a Zacks Rank #1 (Strong Buy). ANF has a trailing four-quarter earnings surprise of 480.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Abercrombie & Fitch’s current fiscal-year EPS suggests a considerable increase from the year-ago reported number.

Ross Stores (ROST) , an off-price retailer, currently carries a Zacks Rank #2. ROST has a trailing four-quarter earnings surprise of 11.5%, on average.

The Zacks Consensus Estimate for Ross Stores’ current fiscal-year earnings suggests growth of 12.6% from the year-ago reported figure.

Urban Outfitters (URBN) , which engages in the retail and wholesale of general consumer products, currently carries a Zacks Rank #2. URBN has a trailing four-quarter earnings surprise of 12.2%, on average.

The Zacks Consensus Estimate for Urban Outfitters’ current fiscal-year earnings suggests growth of 57.1% from the year-ago reported number.


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