The American retail giant is pushing its online business. This opens up new growth potential for the traditional group and drives the share price to new highs. From Sven Heckle
F.The hottest phase of the year begins for bargain hunters: the last Friday in November, known as “Black Friday”, traditionally marks the start of the Christmas business in the USA. Various retailers are engaged in a huge discount battle on the Internet that day. The online giant Amazon The event is dragging on this year and has been celebrating its Black Friday weeks since the beginning of November. Also the US retail giant Walmart participates in the bargain madness and offers three three-day periods in November during which customers can grab attractive bargains.
The online business is playing an increasingly important role in the corporate strategy of the world’s largest retailer, after the company has already become number 1 in stationary retail over the past decades. The group has around 11,500 retail stores in 27 countries around the world, 4,750 of which are in the home market of the USA. With annual sales of $ 524 billion in 2019, the Americans are not only the top-selling company on the planet, but also the world’s largest private employer with more than 2.2 million employees. Despite the size, the company continues to grow. In the second quarter, sales rose 5.6 percent year-on-year to $ 137.7 billion. In the USA, revenues have even increased by more than nine percent. E-commerce activities increased by 97 percent compared to the second quarter of 2019. On November 16, Walmart will present its results for the third quarter. There should be details about the Walmart + membership program, which has been offered in the USA since mid-September. For US $ 12.95 per month or US $ 98 per year, members can have their purchases delivered to their homes free of charge, and there are also perks such as fuel discounts.
Lucrative advertising business
Walmart is also benefiting from the digitization trend with the Walmart Media Group. The sales of this own advertising division reached the billion mark in 2019, it promises high margins. Experts are assuming that advertising revenues will grow by 50 percent annually over the next three years. According to analysts, the division has the potential to increase net income by almost five percent by 2023, with estimated sales of 3.4 billion US dollars. This forecast could still be conservative if one looks at the growth that Amazon’s advertising division recorded at a similar early stage of development. The strategy is well received on the stock market. Not a bargain, but promising in the long term.
Source: BÖRSE ONLINE