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Walmart (WMT) Pulls Out of JD.com to Solidify Core China Operations
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Walmart Inc. (WMT - Free Report) , which is known for making bold moves to enhance its operations, has offloaded its complete stake in JD.com, as revealed by sources. This move represents a significant shift in the U.S. retail giant's strategy, enabling Walmart to focus more intently on bolstering its core operations in China, including Walmart China and Sam’s Club.
Also, experts suggest that this move reflects Walmart’s focus on allocating capital toward other priorities. While the retail giant has sold its stake in JD.com, it will continue to have a commercial relationship with the Chinese e-commerce firm, per sources.
Inside the Headlines
Walmart’s initial investment in JD.com dates back to 2016 when the U.S. retailer sold its Chinese online grocery store, Yihaodian, to JD.com in exchange for a 5% stake in the e-commerce giant. The partnership enabled Walmart to tap into JD.com’s expansive fulfillment and delivery network, which was crucial as Chinese consumers increasingly shifted to online shopping. However, with JD.com’s recent struggles and Walmart’s own success in China, particularly with Sam’s Club, the decision to divest appears to align with the company’s evolving strategic priorities.
Walmart’s exit from JD.com also highlights the growing challenges in China’s highly competitive e-commerce market. JD.com has faced increasing pressure from rival platforms such as Pinduoduo and social media-driven e-commerce initiatives by Xiaohongshu and Douyin. However, sources revealed that despite the end of Walmart’s equity investment, JD.com remains optimistic about future collaborations.
Image Source: Zacks Investment Research
International Growth on Track
Walmart’s decision to sell its stake in JD.com underscores its commitment to strengthening its physical and digital presence in China while navigating the difficulties of the competitive e-commerce landscape. As the company redirects its focus, Walmart’s future in China appears poised for continued growth, backed by its robust operations and strategic investments in the region.
In the most recent quarter, Walmart’s International segment net sales rose 7.1% to $29.6 billion. On a cc basis, net sales jumped 8.3%, driven by Walmex, China and Flipkart. Stores and e-commerce evenly contributed to the sales increase. Segment’s e-commerce sales went up 18% on store-fulfilled pickup & delivery and marketplace. E-commerce penetration expanded across markets. The company witnessed strength in food and consumables, along with better growth in general merchandise.
Wrapping Up
Walmart has been gaining from its highly diversified business with contributions from various segments, channels and formats. The company's robust omnichannel initiatives have driven increased traffic in both in-store and digital channels. Its strategic focus on enhancing delivery services has been particularly rewarding, leading to a consistent rise in market share for groceries. Additionally, newer ventures like the marketplace, advertising and membership have contributed to diversified profits, further reinforcing the resilience of Walmart’s business model.
Shares of this Zacks Rank #3 (Hold) company have rallied 15.3% in the past three months compared with the industry’s growth of 12.9%.
The Zacks Consensus Estimate for current financial-year sales and earnings suggests growth of 11.3% and 14.3%, respectively, from the year-ago reported numbers. PriceSmart delivered an earnings surprise of 10.2% in the last reported quarter.
The Gap, Inc. (GPS - Free Report) , an apparel retail company, currently carries a Zacks Rank #2. The Zacks Consensus Estimate for GPS’ current financial-year sales and earnings indicates growth of around 0.2% and 24.5%, respectively, from the year-ago reported numbers.
Gap has a trailing four-quarter earnings surprise of 202.7%, on average.
Abercrombie & Fitch (ANF - Free Report) , a specialty retailer, currently has a Zacks Rank #2. The Zacks Consensus Estimate for current financial-year sales and earnings suggests growth of 11.5% and 51.1%, respectively, from the year-ago reported numbers.
Abercrombie & Fitch has a trailing four-quarter earnings surprise of 210.3%, on average.
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Walmart (WMT) Pulls Out of JD.com to Solidify Core China Operations
Walmart Inc. (WMT - Free Report) , which is known for making bold moves to enhance its operations, has offloaded its complete stake in JD.com, as revealed by sources. This move represents a significant shift in the U.S. retail giant's strategy, enabling Walmart to focus more intently on bolstering its core operations in China, including Walmart China and Sam’s Club.
Also, experts suggest that this move reflects Walmart’s focus on allocating capital toward other priorities. While the retail giant has sold its stake in JD.com, it will continue to have a commercial relationship with the Chinese e-commerce firm, per sources.
Inside the Headlines
Walmart’s initial investment in JD.com dates back to 2016 when the U.S. retailer sold its Chinese online grocery store, Yihaodian, to JD.com in exchange for a 5% stake in the e-commerce giant. The partnership enabled Walmart to tap into JD.com’s expansive fulfillment and delivery network, which was crucial as Chinese consumers increasingly shifted to online shopping. However, with JD.com’s recent struggles and Walmart’s own success in China, particularly with Sam’s Club, the decision to divest appears to align with the company’s evolving strategic priorities.
Walmart’s exit from JD.com also highlights the growing challenges in China’s highly competitive e-commerce market. JD.com has faced increasing pressure from rival platforms such as Pinduoduo and social media-driven e-commerce initiatives by Xiaohongshu and Douyin. However, sources revealed that despite the end of Walmart’s equity investment, JD.com remains optimistic about future collaborations.
Image Source: Zacks Investment Research
International Growth on Track
Walmart’s decision to sell its stake in JD.com underscores its commitment to strengthening its physical and digital presence in China while navigating the difficulties of the competitive e-commerce landscape. As the company redirects its focus, Walmart’s future in China appears poised for continued growth, backed by its robust operations and strategic investments in the region.
In the most recent quarter, Walmart’s International segment net sales rose 7.1% to $29.6 billion. On a cc basis, net sales jumped 8.3%, driven by Walmex, China and Flipkart. Stores and e-commerce evenly contributed to the sales increase. Segment’s e-commerce sales went up 18% on store-fulfilled pickup & delivery and marketplace. E-commerce penetration expanded across markets. The company witnessed strength in food and consumables, along with better growth in general merchandise.
Wrapping Up
Walmart has been gaining from its highly diversified business with contributions from various segments, channels and formats. The company's robust omnichannel initiatives have driven increased traffic in both in-store and digital channels. Its strategic focus on enhancing delivery services has been particularly rewarding, leading to a consistent rise in market share for groceries. Additionally, newer ventures like the marketplace, advertising and membership have contributed to diversified profits, further reinforcing the resilience of Walmart’s business model.
Shares of this Zacks Rank #3 (Hold) company have rallied 15.3% in the past three months compared with the industry’s growth of 12.9%.
3 Solid Retail Bets
PriceSmart, Inc. (PSMT - Free Report) , which owns and operates U.S.-style membership shopping warehouse clubs, currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for current financial-year sales and earnings suggests growth of 11.3% and 14.3%, respectively, from the year-ago reported numbers. PriceSmart delivered an earnings surprise of 10.2% in the last reported quarter.
The Gap, Inc. (GPS - Free Report) , an apparel retail company, currently carries a Zacks Rank #2. The Zacks Consensus Estimate for GPS’ current financial-year sales and earnings indicates growth of around 0.2% and 24.5%, respectively, from the year-ago reported numbers.
Gap has a trailing four-quarter earnings surprise of 202.7%, on average.
Abercrombie & Fitch (ANF - Free Report) , a specialty retailer, currently has a Zacks Rank #2. The Zacks Consensus Estimate for current financial-year sales and earnings suggests growth of 11.5% and 51.1%, respectively, from the year-ago reported numbers.
Abercrombie & Fitch has a trailing four-quarter earnings surprise of 210.3%, on average.