Stock of the month: Walmart, NYSE:WMT

Walmart is a key holding for us. It has demonstrated an ability to adapt its business model to leverage its scale to provide a strong value proposition to customers.

With 90% of the US population living within 10 miles of stores, Walmart has been using this store base as a competitive advantage to facilitate pickup and returns services that are industry leading. Store fulfilled delivery was up about 50% in Q2, with customers increasingly choosing and paying for delivery of their ecommerce orders in under one hour or under three hours.

The value proposition is particularly pertinent in times of economic slowdown, and we can see this as upper-income households account for the majority of gains even though sales and share gains continue among middle and lower-income households. Nearly half of customer orders in the Bodega and Walmart formats in Mexico included a private brand item in Q2, more evidence of an increasingly frugal consumer.

Globally, advertising grew 26%, including 30% growth for Walmart Connect in the US Advertising sales driven by marketplace sellers were up nearly 50%.

Ecommerce sales in international markets were up 18%. In China, ecommerce orders delivered within one hour rose by 28% to 59 million orders. In India, Flipkart Grocery grew over 50% while providing next-day delivery in over 200 cities. In Canada, Delivery Pass members drove more than 40% of grocery delivery sales, with order frequency significantly higher than that of non-members.

Global ecommerce losses continue to narrow, most notably in Walmart US and Flipkart businesses and we expect this trend to continue to improve.

US marketplace and fulfilment services continue have grown by over 30% in each of the last four quarters, a strong base to build on.

 

Bimal Patel | Senior Fund Manger

Bimal is the co-fund manager of the WS Canlife North American and WS Canlife Global Equity fund. Both the Portfolio funds range and the Diversified Risk Managed Range invest into the WS Canlife North American fund as a core holding to the US market. Each of Bimal’s funds have returned top quartile performance over the last 3 years*.

For more information on the WS Canlife North American Fund or the WS Canlife Global Equity Fund

*Source: Morningstar as at quarter end 30/06/2024. Data based on the C Acc share class bid to bid with net income reinvested rebased in £ sterling.