Wal-Mart Growth Initiatives 'Not Yet Proven'

At its Annual Shareholder Meeting in Fayetteville, A.R., Wal-Mart Stores, Inc. WMT reaffirmed its long term goals.

Barclays’ Matthew McClintock maintained an Equal Weight rating on the company, with a price target of $70.

Pricing Investments

McClintock believes that management is on track to executing on these long term goals, given that Wal-Mart has seen positive comps in 10 of its 11 markets.

“Customer scores continue to improve, which is a positive indication of underlying efforts but the transformation remains in early stages,” the analyst mentioned.

Management believes that pricing has remained stagnant for too long and the business was now ready to take advantage of fresh pricing investments, although McClintock does not expect any significant difference in pricing in the near term.

Online Grocery Initiative

“The company remains in early stages with online grocery, but management noted that subsequent markets launches have continued to show improvement relative to previous markets,” McClintock noted.

Wal-Mart has three primary objectives associated with this initiative, including attracting new customers, strengthening relationships with existing ones and introducing a service aspect to the brand.

According to the Barclays report, “The company announced a test of grocery delivery through Uber and Lyft, which is not exclusive, but should still represent a "game-changer" in service level as customers will have on-demand delivery options to compliment previous pickup in store options.”

Management also indicated that there would be further improvements via supply chain initiatives, which could unlock inventory in a more dynamic manner worldwide.