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Walmart (WMT) To Fortify Delivery Game, Invests in Cruise

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Zacks Equity Research
·4 min read
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Walmart Inc. WMT has been extending all limits to augment its delivery services to enrich consumers’ shopping experiences. Progressing along these lines, the company hasmade an investment in a San Francisco-based autonomous-driving company — Cruise. We note that the retail behemoth joined hands with Cruise in November 2020 to create a delivery pilot in Scottsdale and Arizona.

Impressively, Walmart is optimistic about Cruise’s unique business model, impressive technology and driverless testing. Along with this, both parties are committed toward a zero emissions future. Markedly, Cruise operates a fleet of all-electric vehicles that are powered with 100% renewable energy. Well, management expects its alliance with Cruise to help Walmart in creating an efficient, affordable and scalable delivery ecosystem.

Recently, Walmart announced that by the end of fiscal 2022 it anticipates two-thirds of its U.S. hourly store roles to become full-time. This goes in tandem with the company’s commitment to accelerate its pickup and delivery game. Also, Walmart follows a full-time staffing approach in its distribution and fulfillment centers, wherein more than 80% of current associates work full-time.

Walmart Continues to Ease Customers’ Convenience

Walmart has taken robust strides to strengthen its delivery arm, evident from its partnership with HomeValet, introduction of Carrier Pickup by FedEx Corporation FDX and launch of Walmart+ membership program. Apart from these, the company has undertaken initiatives like drone delivery pilots in the United States with Flytrex, Zipline and DroneUp to ramp up its delivery game. Walmart had also unveiled an alliance with Door Dash in the third quarter of fiscal 2021 to deliver prescriptions from pharmacies of Sam’s Club along with expanding Scan & Go to all fuel stations at U.S. Sam’s Clubs. Prior to this, Walmart unveiled Express Delivery during the first quarter at several stores, which helps it deliver orders to customers in less than two hours.

In earlier developments, Walmart joined hands with Point Pickup, Roadie and Postmates. It also acquired Parcel to enhance its delivery service. Furthermore, the company’s store and curbside pickup options add to customers’ convenience. As of fiscal fourth quarter, Walmart U.S. had 3,750 pickup locations and 3,000 same-day delivery locations.

Well, Walmart has been making efforts to step up its online game for a while now. In this regard, the supermarket giant has been taking several e-commerce initiatives, including buyouts, alliances and improved delivery and payment systems. The company’s investment in Ninjacart; contracts with Goldman Sachs GS and Shopify SHOP; buyouts of ShoeBuy, Moosejaw and Bonobos, among others, underscore its intention to build an impressive digital brand portfolio.

Wrapping Up

All said, this Zacks Rank #4 (Sell) company has been seeing high COVID-19 costs, which along with the repayment of the property tax relief in the U.K. put pressure on its adjusted operating income in the fourth quarter of fiscal 2021. Apart from this, management’s guidance for fiscal 2022 suggests a decline in net sales, operating income and earnings per share, mainly due to divestitures. Incidentally, the company completed the divestiture of Walmart Argentina in November 2020 and Walmart U.K. in February 2021. Further, management had earlier highlighted that it expects to sell its business in Japan by the first quarter of fiscal 2022

Notably, shares of Walmart have lost 2.7% in the year-to-date period compared with the industry’s decline of 2.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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