Following a defect in Wal-Mart’s tripod stools causing the product to break and create a fall hazard, the American retail store is now recalling 46,300 units of the said product. There was also an announcement from the Consumer Product Safety Commission that the customers who have bought the product to return and to stop use although there hadn’t been any reports of accidents caused by the said product.
The American multinational retail corporation’s shares lost 1.7% following the announcement. Despite this, analysts are unshaken on the company’s position after it hit an all-time high at the recent close during Thursday’s trading where shares have increased to up to 23% this year.
Wal-Mart’s Stock has increased by 15% this year with their market value currently at $395 billion. Although the companies have not made any major efforts in boosting their e-commerce presence, investors are still in high hopes that Walmart would be taking that path soon too with their digital sales rising by 12% in the present quarter.
Wal-Mart to start E-commerce in India
In their efforts to step into the e-commerce market, Wal-Mart has reportedly been in talks with Flipkart Online Services, an eCommerce firm in India which is believed to be the country’s largest.
Reportedly, Wal-Mart is taking this step to be able to compete against one of their competitors, Amazon who is known for their large online market. This would allow both Wal-Mart and Flipkart to
This deal would not only extend Wal-Mart’s reach in Asia but also give Flipkart more capital. Just earlier this month, Jet.com was acquired by Wal-Mart as one of their first moves in entering the e-commerce market to compete with Amazon.
Reports show that Wal-Mart would be investing about $750 million to $1 billion in the Indian e-commerce giant until further notice and negotiation.
Back in June, Wal-Mart was also able to start a partnership with China through a deal with JD.com by selling them Yihaodian, the retailer’s Chinese eCommerce business. This would give Wal-Mart a 5% equity stake in JD.com allowing Wal-Mart a foot in China’s retail market.
WMT Q2 Earnings
The retailer giant’s second quarter earnings report shows earnings of $10.7 per share in their second fiscal although it is lower than last year’s earnings of $1.08 per share while Wal-Mart’s shares up by 0.5% to $120.85 billion.
This was prior to the acquisition of Jet.com where the company has raised its outlook for the rest of the year in light of the promising results and the retail store’s biggest gains in a span of four years. The U.S. division alone gained 1.6% in their same-store sales and the biggest since July 2012 where there was a 2.2% increase in sales. Wal-Mart stores in the U.K. also reported a growth in their sales.
This was led by the wage increase and training program given by the company to its employees. Aside from that, there was also an addition of online stores in different locations.
Although there was a slight drop in the stocks due to the recall of the tripod stools, the company is currently reporting growing same-store sales in line with their efforts in boosting their ecommerce presence following Jet.com, JD.com, and Fipkart’s acquisitions and partnerships.
Analysts have increased their price target for WMT for the past months given the positive prospects of their investment with their employees and their heavy focus on increasing their ecommerce presence. Despite a couple of declines, the company holds a steady net income, cash flow, and a firm stock price.