Why Amazon Prime Day doesn't scare this Walmart investor

Brian Sozzi
·Executive Editor
3 min read
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In this article:

This year’s Amazon Prime Day could set new sales records for the e-commerce beast. But that doesn’t mean the momentum Walmart (WMT) has shown during a tumultuous year for retail will die on the vine before Christmas.

“I don’t think you’re going to see too much [in sales] pulled from Walmart for Amazon Prime Day. Prime Day will have a huge amount of sales, but Walmart tends to come out and put out specials as well on their website and have huge growth in the number of people who are going to Walmart,” explained Crossmark Global Investments chief market strategist Victoria Fernandez on Yahoo Finance’s The First Trade.

Crossmark considered a recent investment in Target (TGT), but decided to pull the trigger on Walmart ahead of the holidays. Fernandez says the stock offers a combination of consumer staple like safety (important before the uncertain presidential election...) and exposure to a company firing mostly on all cylinders.

To Fernandez’s point, Walmart isn’t sitting idle on Prime Day.

The world’s largest retailer is promoting a ‘Big Save’ event Tuesday with its own across the board deals. Walmart’s aggressiveness on Prime Day is the latest maneuver in what has been a hard-charging year for CEO Doug McMillon.

The company is actively working to close a partnership deal with Oracle (ORCL) for TikTok, a tie-up that could create the digital marketplace of the future. Walmart recently unveiled Walmart+, a cheaper-than-Prime membership service for customers. Walmart has also continued to make large strides in same-day delivery and order pickup, not to mention has gained a lot of goodwill among consumers for how it has managed employees during the pandemic.

And all of that shows.

Walmart U.S. saw same-store sales surge 9.3% in the second quarter. The division’s e-commerce sales exploded 97%. Adjusted operating income for the entire business rose an impressive 18.6% from a year ago — no small feat during a pandemic and given Walmart’s size.

An employee gathers shopping carts at Walmart, July 22, 2020 in Burbank, California. - The country's most populous state reported a record 12,807 new coronavirus infections in the past 24 hours. (Photo by Robyn Beck / AFP) (Photo by ROBYN BECK/AFP via Getty Images)
An employee gathers shopping carts at Walmart, July 22, 2020 in Burbank, California. - The country's most populous state reported a record 12,807 new coronavirus infections in the past 24 hours. (Photo by Robyn Beck / AFP) (Photo by ROBYN BECK/AFP via Getty Images)

“We believe that Walmart is moving with speed and decisiveness into/through the new world of omni-channel retailing,” wrote JPMorgan retail analyst Christopher Horvers in a recent note to clients.

Shares of Walmart have gained 23% year-to-date, according to Yahoo Finance Premium data. Meanwhile, Yahoo Finance Premium data shows sell-side profit estimates on Walmart for the key third and fourth quarters continue to trend higher, underscoring Wall Street’s confidence in the company’s momentum (despite Amazon’s long tentacles).

Note: Walmart CEO Doug McMillon will be a guest at this year’s Yahoo Finance All Markets Summit. More details here.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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