Walmart (WMT) Pauses Stake Sale in Asda Amid Coronavirus

By Zacks Investment ResearchStock MarketsApr 03, 2020 04:39AM ET

www.investing.com/analysis/walmart-wmt-pauses-stake-sale-in-asda-amid-coronavirus-200520613

Walmart (WMT) Pauses Stake Sale in Asda Amid Coronavirus

By Zacks Investment Research | Apr 03, 2020 04:39AM ET

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Walmart (NYSE:WMT) Inc. WMT shelves plans to sell off a major stake in its U.K. grocery unit, Asda, on hold to better manage its business during coronavirus-induced stockpiling, per sources. Well, fast-spreading coronavirus spiked up the demand for essentials like groceries and related staples.

Amid gloominess related to the coronavirus crisis, big-box retailers are witnessing spike in essential goods’ demand owing to consumers’ panic-buying trends. As a result, demand for grocery, medicines, cleaning supplies and related food staples are skyrocketing.

As consumers are stocking up on essential commodities, companies are leaving no stone unturned to fill shelves faster. We note that, retailers like Target Corp. TGT, Kroger (NYSE:KR) KR and Costco COST, to name a few, have been witnessing demand spike for essential goods amid coronavirus chaos.

Coming back to Walmart, the company’s plans to sell major stake in Asda stems from its efforts to shift its focus on more profitable regions like India and China. These moves are likely to strengthen Walmart’s International segment. In this regard, Walmart’s buyout of major stake in Flipkart is helping the former expand its presence in India, which is a major retail market in the world.

In fourth-quarter fiscal 2020, currency-neutral net sales rose 2.2% to $33 billion, with six out of 10 markets registering positive comps in the International segment. Moreover, management expects net sales in the International segment to increase approximately 4% at cc in fiscal 2021.

Apart from these, Walmart is trying every means to evolve with changing consumer environment to compete with brick-and-mortar rivals and e-Commerce king Amazon (NASDAQ:AMZN). In this regard, the company has been taking several e-commerce initiatives, including buyouts, alliances, and improved delivery as well as payment systems. Moreover, the company’s efforts to improve its website, enhance check-out process along with Walmart Pay mobile payment system and Mobile Express Returns program highlight its initiatives to accelerate the online business.

Shares of this Zacks Rank #3 (Hold) company have increased 20.9% in the past year compared with the industry’s rise of 19.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Walmart (WMT) Pauses Stake Sale in Asda Amid Coronavirus

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