Wal-Mart Updates: International Biz is Clicking, New Initiatives Encouraging

This morning Wal-Mart (NYSE:WMT) released encouraging results showing an increase in comparable same stores sales and strength in its international business which grew at a 20% clip. However margins were under pressure given inflation pressures, which is a persistent worry. WMT has responded with several cost cutting initiatives that are bearing fruit. Some of the recent initiatives we like include its push into digital such as its Grabble acquisition and mobile apps launch as well as its idea to provide limited health care services to meet the growing demand for access to inexpensive primary care.

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Acquisitions Show Digital Focus & New Initiatives

The retail giant’s recent acquisition of Australia-based start-up Grabble was an encouraging development last week that highlights Wal-Mart’s international and online strategy. Founded in January 2010, Grabble provides retailers a point-of-service application for purchases. Wal-Mart plans to integrate Grabble with Walmart Labs, its digital technology division. ^[1]

There were also media reports circulating last week that Wal-Mart is exploring ways to partner with healthcare companies with an aim to provide  primary care services to its customers. The retailer plans to treat and manage a range of serious medical conditions including HIV, diabetes, arthritis and clinical depression at its 140 in-store clinics nationwide. ^[2] We believe this move if materializes could add an altogether different revenue stream for the retailer.

Last Wednesday, Wal-Mart also launched new applications for iPad and iPhone that permit consumers to browse the inventory of the local Wal-Mart outlet, scan products and create voice-activated shopping lists. According to date from IBM Coremetrics, the mobile sales made up almost 10 percent of online retail sales in October, up from 3.4 percent for the same month last year. We believe Wal-Mart is keen to be ahead in the latest wave of technological advances. It recently announced integration with Facebook and acquired Yihaodian, a Chinese e-commerce platform. With mobile sales contributing a larger share of the online sales and with more number of people possessing a smartphone in the coming years, we believe these small advances do pave a way for a technologically strong company. ^[3]

Understand How a Company’s Products Impact its Stock Price at Trefis

1. Walmart acquires Aussie tech start-up Grabble, Smart Company, November 14, 2011 [↩]
2. Wal-Mart considers expanding healthcare services at its clinics, Los Angeles Times, November 10, 2011 [↩]
3. Walmart Launches New Mobile Apps to Give Customers Better Shopping Experiences Online and In-Store, Company Website, November 9, 2011 [↩]