Walmart seems to have created an online and physical experience that works

As Walmart goes, so goes the American consumer? Perhaps not so much any more. Last week, US statistics revealed a stunning fall in holiday retail sales. A monthly decline of more than 1 per cent in December has not been seen since the financial crisis. But Walmart suffered no such crisis. Yesterday it announced that its like-for-like sales in the fourth quarter spiked 4.2 per cent. Comparable sales were up nearly 7 per cent, the retailer’s best performance in almost a decade. Walmart has embarked on a transformation to take on Amazon. Few companies can claim that it has actually worked. Walmart, whatever the questionable outlook for traditional bricks-and-mortar retailers generally, boasts genuine competitive advantages. It has multiple store formats — from Supercenters to smaller markets and club stores. With its massive balance sheet it could afford a shift into ecommerce by acquiring Jet.com, Bonobos and Flipkart. Walmart seems to have created an online and physical experience that works smoothly. The question for shareholders though is, at what cost? Investments in ecommerce have reduced gross profit margins below 24 per cent, levels that Walmart has typically exceeded in most quarters and a level on which traditional retail investors obsess. 

 
Lex.

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