The Zacks Analyst Blog Highlights: Wal-Mart Stores,, Roundy's and Kroger

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For Immediate Release

Chicago, IL - October 28, 2015 - announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Wal-Mart Stores, Inc. ( WMT ),, Inc. ( AMZN ), Roundy's, Inc. ( RNDY ) and Kroger Co. ( KR ).

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Here are highlights from Tuesday's Analyst Blog:

Wal-Mart Follows Amazon Testing Drones for Grocery Delivery

Wal-Mart Stores, Inc. ( WMT ) intends to test drones for package delivery and pickup and for checking warehouse inventories, per media reports.

The retail giant has been testing drone technology indoors for several months, as it is illegal to commercially use drones outdoors under current U.S. law. Following the footsteps of, Inc. ( AMZN ), Wal-Mart has reportedly applied to the Federal Aviation Administration ('FAA') for permission to test drones outdoors in the U.S. to check if these can be efficiently used for delivering products to Wal-Mart facilities as well as to consumer homes. Amazon was granted permission to use drones outdoors in April this year, after working on its drone delivery service since late 2013.

Bentonville, AR-based Wal-Mart has been trying to keep pace with Amazon in the delivery space by opening a new network of online fulfillment centers to expedite deliveries and testing its own subscription shipping service, like Amazon Prime. It has also been offering in-store pickup, where customers can order an item online and have it ready for pick up at their local Wal-Mart store.

In an effort to compete with Amazon and to improve customer service, Wal-Mart is aggressively investing in its e-commerce business, which is increasing its expense burden. Wal-Mart has also pledged to spend $1.5 billion to raise employees' wages and give them extra training in fiscal 2017. Higher labor costs along with the company's efforts to overhaul its stores and invest in its online operations will weigh on its earnings.

Wal-Mart has also been posting disappointing results due to sluggish U.S. sales. It is also facing intense competition on all fronts, ranging from dollar stores to the traditional grocery store chains and online business.

Wal-Mart projects slower growth in new stores. Price competition is one of the reasons for the slower growth. Wal-Mart is finding it difficult to compete with local grocers in some markets, which compelled it to scale back expansion plans for smaller stores. Its international operations are also under pressure with a stronger dollar eating into sales.

In view of these headwinds, Wal-Mart has lowered its earnings outlook for fiscal 2016 . Further, the retail giant has forecast that its earnings could fall by as much as 12% in fiscal 2017 due to higher wages and increased spending on e-commerce activities. The company also anticipates flat sales in fiscal 2017 due to stronger-than-anticipated negative impact of the dollar.

Wal-Mart is undertaking a turnaround plan in order to improve its sales, business operations and customer service. The company is also striving to expand its grocery pickup and delivery service and thus believes that the use of drones would be of great help. Further, the new technology would connect Wal-Mart's vast network of stores, distribution centers, fulfillment centers and transportation fleet and help to make its present distribution system more efficient.

Wal-Mart currently holds a Zacks Rank #5 (Strong Sell).

Better-ranked retailers include Roundy's, Inc. ( RNDY ) and The Kroger Co. ( KR ). Both of them hold a Zacks Rank #2 (Buy).

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WAL-MART STORES (WMT): Free Stock Analysis Report

AMAZON.COM INC (AMZN): Free Stock Analysis Report

ROUNDYS INC (RNDY): Free Stock Analysis Report

KROGER CO (KR): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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