Walmart’s Holiday Preparations Look Strong: Jefferies
Walmart’s preparations for the holiday season appear to be in full swing, according to Jefferies analysts, who recently visited a Walmart Supercenter in Canada. The investment bank noted that the store was “heavily trafficked, clean, and well merchandised,” with several factors pointing to robust performance during the holiday season and beyond.
The fresh section of the store, which includes food and consumables, was particularly impressive, with Jefferies describing it as “well-stocked, bright, and new.” This section led the 3.1% Q3 comp sales growth in Canada, and the firm expects momentum to continue moving forward.
The general merchandise sections also made a strong impression, featuring a variety of holiday-ready products, including branded apparel and popular gift items. Jefferies noted that Walmart U.S.’s positive general merchandise comps in Q3, which was the first since 2022, suggests a potential shift in consumer spending.
The firm also highlighted Walmart’s competitive pricing strategies, including a “healthy amount of rollbacks and discounts,” with 6,000 items on rollback and 2,000 converted to permanent price reductions in the U.S. This has helped to keep price gaps strong, particularly in private labels, without significantly impacting margins. For example, Walmart’s Great Value mac and cheese was priced at just 97 cents compared to $1.67 per unit for a national brand.
E-commerce was also a bright spot, with Walmart Canada reporting 27% e-commerce sales growth for the second consecutive quarter. Analysts observed numerous pickers fulfilling online orders, underscoring this trend.
Given these strengths, Jefferies reiterated Walmart as a top pick into 2025, citing the retailer’s ability to gain wallet share, improve discretionary spending, and leverage technology for margin expansion. The firm maintains a Street-high price target of $111 for Walmart.