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Walmart's (WMT) Buyout of 47% Stake in Massmart to Aid Growth
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Walmart Inc. (WMT - Free Report) has been committed to strengthening its business, domestic and international. Moving on these lines, the company offered to buy the remaining stake in Massmart Holdings Limited, per various media sources. Walmart has apparently made a 6.4-billion rand offer for the South African retailer’s 47% stake.
Walmart bought a 51% interest in Massmart more than a decade back, marking its foray into South Africa and adding a new leaf to its geographical growth story. Sources reveal that the U.S. supermarket giant has been offering increased financial and operational support to Massmart's operations since then. If the abovementioned offer for the remaining stake takes shape, it is likely to support Massmart’s turnaround plan.
Walmart’s International business has been performing well. Sales in the segment rose 5.7% to $24.4 billion in the second quarter of fiscal 2023. On a constant currency or cc basis, net sales jumped 9.9%. The company witnessed positive comp sales across its biggest markets – Canada, Mexico and China. In the International segment, e-commerce sales advanced by 15% at cc. Operating income, on a cc basis, grew 28.3% to $1.1 billion.
Image Source: Zacks Investment Research
What Else to Know?
Walmart has been benefiting from its robust omnichannel operations due to its efforts to enhance both store and online experience. From the fiscal 2021 beginning to the fiscal 2022 end, the company’s digital sales, as a percentage of sales, increased from 6% to 13%. The retail giant has been taking several e-commerce initiatives, including buyouts, alliances, and improved delivery and payment systems.
The company is innovating the supply chain and adding capacity as well as building businesses, such as Walmart GoLocal, Walmart Connect, Walmart Luminate, Walmart+, Spark Delivery, Marketplace and Walmart Fulfillment Services. The company recently revealed the addition of Paramount+ streaming service for the members of Walmart+ at no extra cost in September.
In the second quarter of fiscal 2023, total revenues of $152.9 billion grew 8.4% and beat the consensus mark of $151.4 billion. On its last earnings call, management stated that it expects a solid end to the back-to-school season and remains encouraged about its fall and holiday products. Walmart now expects consolidated net sales growth of nearly 4.5% for fiscal 2023. Excluding divestitures, the metric is likely to grow roughly 5.5%.
Management had earlier anticipated consolidated net sales growth of nearly 4% at cc. Excluding divestitures, the metric was expected to grow nearly 4.5 to 5%. For the third quarter of fiscal 2023, WMT expects consolidated net sales growth of nearly 5%.
Walmart’s consolidated operating income and earnings per share guidance for fiscal 2023 suggest a decline from the year-ago period’s reported figures. The company’s sales and profit views for fiscal 2023 reflect the trends witnessed to date along with volatility related to inflation and consumer spending in the coming quarters. However, the company is undertaking additional pricing actions in the third quarter.
Shares of this Zacks Rank #3 (Hold) company have increased 3.3% in the past three months compared with the industry’s rise of 1.3%.
Dillard's, which operates retail department stores, sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of nearly 215%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Dillard's current financial-year sales suggests growth of nearly 6% from the year-ago period. DDS has an expected EPS growth rate of 14.6% for three to five years.
Ulta Beauty, which operates as a retailer of beauty products, sports a Zacks Rank #1. Ulta Beauty has a trailing four-quarter earnings surprise of 32.8%, on average. ULTA has an expected EPS growth rate of 10.7% for three to five years.
The Zacks Consensus Estimate for Ulta Beauty’s current financial-year sales suggests growth of 13.7% from the year-ago reported number.
Costco, which operates membership warehouses, currently carries a Zacks Rank #2 (Buy). COST has an expected EPS growth rate of 9.2% for three to five years.
The Zacks Consensus Estimate for Costco’s current financial-year revenues and EPS suggests growth of 15.4% and 18.2%, respectively, from the year-ago reported figure. COST has a trailing four-quarter earnings surprise of 9.7%, on average.
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Walmart's (WMT) Buyout of 47% Stake in Massmart to Aid Growth
Walmart Inc. (WMT - Free Report) has been committed to strengthening its business, domestic and international. Moving on these lines, the company offered to buy the remaining stake in Massmart Holdings Limited, per various media sources. Walmart has apparently made a 6.4-billion rand offer for the South African retailer’s 47% stake.
Walmart bought a 51% interest in Massmart more than a decade back, marking its foray into South Africa and adding a new leaf to its geographical growth story. Sources reveal that the U.S. supermarket giant has been offering increased financial and operational support to Massmart's operations since then. If the abovementioned offer for the remaining stake takes shape, it is likely to support Massmart’s turnaround plan.
Walmart’s International business has been performing well. Sales in the segment rose 5.7% to $24.4 billion in the second quarter of fiscal 2023. On a constant currency or cc basis, net sales jumped 9.9%. The company witnessed positive comp sales across its biggest markets – Canada, Mexico and China. In the International segment, e-commerce sales advanced by 15% at cc. Operating income, on a cc basis, grew 28.3% to $1.1 billion.
Image Source: Zacks Investment Research
What Else to Know?
Walmart has been benefiting from its robust omnichannel operations due to its efforts to enhance both store and online experience. From the fiscal 2021 beginning to the fiscal 2022 end, the company’s digital sales, as a percentage of sales, increased from 6% to 13%. The retail giant has been taking several e-commerce initiatives, including buyouts, alliances, and improved delivery and payment systems.
The company is innovating the supply chain and adding capacity as well as building businesses, such as Walmart GoLocal, Walmart Connect, Walmart Luminate, Walmart+, Spark Delivery, Marketplace and Walmart Fulfillment Services. The company recently revealed the addition of Paramount+ streaming service for the members of Walmart+ at no extra cost in September.
In the second quarter of fiscal 2023, total revenues of $152.9 billion grew 8.4% and beat the consensus mark of $151.4 billion. On its last earnings call, management stated that it expects a solid end to the back-to-school season and remains encouraged about its fall and holiday products. Walmart now expects consolidated net sales growth of nearly 4.5% for fiscal 2023. Excluding divestitures, the metric is likely to grow roughly 5.5%.
Management had earlier anticipated consolidated net sales growth of nearly 4% at cc. Excluding divestitures, the metric was expected to grow nearly 4.5 to 5%. For the third quarter of fiscal 2023, WMT expects consolidated net sales growth of nearly 5%.
Walmart’s consolidated operating income and earnings per share guidance for fiscal 2023 suggest a decline from the year-ago period’s reported figures. The company’s sales and profit views for fiscal 2023 reflect the trends witnessed to date along with volatility related to inflation and consumer spending in the coming quarters. However, the company is undertaking additional pricing actions in the third quarter.
Shares of this Zacks Rank #3 (Hold) company have increased 3.3% in the past three months compared with the industry’s rise of 1.3%.
3 Hot Retail Stocks
Here, we have highlighted three better-ranked stocks, namely Dillard's, Inc. (DDS - Free Report) , Ulta Beauty (ULTA - Free Report) and Costco Wholesale (COST - Free Report) .
Dillard's, which operates retail department stores, sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of nearly 215%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Dillard's current financial-year sales suggests growth of nearly 6% from the year-ago period. DDS has an expected EPS growth rate of 14.6% for three to five years.
Ulta Beauty, which operates as a retailer of beauty products, sports a Zacks Rank #1. Ulta Beauty has a trailing four-quarter earnings surprise of 32.8%, on average. ULTA has an expected EPS growth rate of 10.7% for three to five years.
The Zacks Consensus Estimate for Ulta Beauty’s current financial-year sales suggests growth of 13.7% from the year-ago reported number.
Costco, which operates membership warehouses, currently carries a Zacks Rank #2 (Buy). COST has an expected EPS growth rate of 9.2% for three to five years.
The Zacks Consensus Estimate for Costco’s current financial-year revenues and EPS suggests growth of 15.4% and 18.2%, respectively, from the year-ago reported figure. COST has a trailing four-quarter earnings surprise of 9.7%, on average.