Wal-Mart Had an Incredible 2017

Everything is working for the retail giant.


Timothy Green, The Motley Fool

Jan 3, 2018


We won't know exactly how Wal-Mart (NYSE:WMT) fared during the holidays until February, but the retailer will likely put up solid numbers if the first nine months of 2017 are any indication. Wal-Mart had an outstanding 2017 on pretty much every front. The stock soared 42%, handily beating the broader market. The company's thousands of stores produced consistent sales growth, and the online business exploded.


A bet that paid off


Shares of Wal-Mart crashed in 2015, losing 28% of their value. Part of the reason was the company's plan to raise wages and invest in its employees. CEO Doug McMillon announced the plan in February 2015. It featured a higher starting wage, improved training programs, better benefits, and more flexible scheduling.


Concerns that these changes would knock down earnings took a toll on the stock price. Those fears weren't misplaced -- Wal-Mart reported earnings declines in both 2015 and 2016. But the long-term benefits outweigh the short-term downside. Wal-Mart has reported comparable sales growth in the U.S. for 13 consecutive quarters, despite a retail environment that's testing many of its peers. Wal-Mart had no trouble driving traffic to its stores in 2017.


Profits are still being pressured by the company's investment in its stores, as well as its e-commerce initiatives. But it's clear that Wal-Mart's strategy is working.


An e-commerce monster


Wal-Mart paid $3 billion for e-commerce start-up Jet.com in late 2016. Jet.com CEO Marc Lore was put in charge of Wal-Mart's entire e-commerce operation. It was an expensive acquisition, but it jump-started the company's e-commerce efforts at a time when it absolutely needed to catch up to Amazon.


The results of this acquisition and Wal-Mart's other e-commerce initiatives speak for themselves.


Not a cheap stock ...


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