The Walmart Inc (NYSE: WMT) stock rally ran out of steam when the company reported that online sales growth dropped from 50 percent in the third quarter to 23 percent in the fourth quarter. This week, Walmart reassured investors that online sales growth will bounce back in 2018, and the company may be willing to spend big to keep that promise.
At the ShopTalk conference on Tuesday, Marc Lore, president and CEO of Walmart’s U.S. e-commerce business, reiterated that Walmart expects 40 percent e-commerce sales growth this year. Lore said the reacceleration will come from the company’s free, no-membership two-day shipping offer, its “Easy Reorder” option, expansion of grocery pick-up from 1,200 stores to 2,200 stores and the launch of same-day delivery to 100 U.S. metro areas by the end of the year.
[See: The 9 Best ETFs for Retail Power.]
According to Bank of America analyst Robert Ohmes, Walmart is planning on making some changes to maximize the sales potential of both Walmart.com and subsidiary Jet.com and make the sites complementary. According to the company, Jet.com outperforms with higher-income, urban millennial customers, while Walmart.com performs better with older, traditional Walmart shoppers.
Ohmes says Walmart will likely launch additional home-grown brands like Bonobos and mattress and bedding brand Allswell to help differentiate Jet.com.
“Importantly, Walmart.com’s home business is apparently very strong, with impressive click-through rates, which we believe inspired Jet.com’s move into the category with an in-house developed digital brand,” Ohmes says.
However, Ohmes says building in-house brands will not stop Walmart from pursuing additional mergers and acquisitions.
“We also expect dot-com M&A will also continue as Walmart buys dot-com brands that can leverage WMT’s infrastructure and supply chain,” he says.
[See: 9 Ways to Buy Stocks That Everyone Needs.]
Ohmes is optimistic about Walmart’s ability to execute its omni-channel strategy in the long-term. Walmart is Bank of America’s top stock pick for what it calls the “discount store decade,” a 10-year stretch in which aging baby boomers and millennials will drive a shift toward more budget-minded shopping. Once Walmart can prove its online sales growth is back on track, Ohmes says the stock should benefit from meaningful earnings multiple expansion.
Bank of America has a “buy” rating and $120 price target for WMT stock.
More from U.S. News
Buy and Hold: Be an Investing Expert Like Warren Buffett
8 Catalysts That Are Moving Amazon.com, Inc. (AMZN) Stock
8 Stocks to Buy For a Starter Portfolio
Walmart Inc (WMT) Reassures Investors About Online Sales originally appeared on usnews.com
