Wal-Mart Stores Inc
) has announced a couple of fulfillment centers, fully dedicated
to deliver U.S. online orders at a lower cost. The two centers,
located in Texas and Pennsylvania, will house numerous items like
electronics, toys, apparel, fitness equipment, sporting goods and
The center, based in Texas, started shipping orders last week
and will employ 275 full-time workers. The Pennsylvania center
will employ more than 350 full-time associates and will open in
the first quarter of fiscal 2015.
Walmart is uniquely positioned to ship online orders from
stores and from its other distribution centers, as it has a
high-quality transportation network. With the addition of these
two facilities, Walmart will be able to provide its customers a
quick and seamless online shopping experience. The company is
also hopeful that the opening of these distribution centers will
also boost online sales and expand product selection at
We note that Walmart is currently battling sluggish sales.
Moreover, according to recent media reports, Walmart is slashing
product orders for the next two quarters of fiscal 2013 as it is
trying to destock its inventory. Though Walmart has denied the
reports, but investors, on their part, continue to remain
skeptical of this Zacks Rank #4 (Sell) company as it has been
posting declining same-store sales for the past few months.
In the recently concluded second quarter of fiscal 2014,
Walmart posted softer-than-expected sales and missed the Zacks
Consensus Estimate by 1.8%. This was on top of sluggish results
announced in the first quarter. U.S. same-store sales in the
second quarter declined 0.3% in contrast to 2.2% growth in the
prior-year quarter and missed the guidance range of flat to 2%
increase. Weak consumer spending environment and
lower-than-expected inflation hurt comps in the quarter.
Walmart also lowered its sales guidance for fiscal 2014,
signaling weak sales in the upcoming quarters. The company
sharply lowered its net sales growth guidance from a range of
5%-6% to a range of 2%-3% due to weaker-than-expected performance
in the first half. Moreover, Walmart warned of a challenging
sales environment in the second half, which together with
currency headwinds could hurt second half top-line growth.
The company expects the gloomy consumer spending environment
to continue globally for some more time. The economic strains in
the U.S. and abroad are likely to pressurize its low-income
shoppers for the rest of the year.
We believe that a cautious consumer spending environment might
impact the upcoming holiday season. However, Walmart is geared up
to turn around its sluggish sales this holiday season and has
unveiled plans to hire 55,000 seasonal employees and give more
hours to thousands of other workers. The company is expected to
add 600 workers during the holidays and other peak seasons in
these two new facilities in Pennsylvania and Texas.
Other retailers that are better placed and worth considering
Dollar General Corp
Ross Stores Inc
Etablissements Delhaize Frer
), all of which hold a Zacks Rank #2 (Buy).
DELHAIZE-LE (DEG): Free Stock Analysis Report
DOLLAR GENERAL (DG): Free Stock Analysis
ROSS STORES (ROST): Free Stock Analysis
WAL-MART STORES (WMT): Free Stock Analysis
To read this article on Zacks.com click here.