Store checks suggest Walmart's holiday positioning remains strong: Jefferies

Investing.com -- Walmart's holiday preparations appear to be in full swing, with Jefferies analysts highlighting the retailer's strong positioning following a recent visit to a Walmart (NYSE:WMT ) Supercenter in Canada. 

The investment bank said in a note that the store was "heavily trafficked, clean, and well merchandised," with several factors pointing to robust performance during the holiday season and beyond.

One standout was said to be Walmart's fresh section, which Jefferies described as well-stocked, “bright, and new.” 

“The section was well trafficked. Food and consumables led the 3.1% Q3 comp sales growth in Canada. We expect momentum in this part of the business will continue ahead,” said Jefferies.

The general merchandise sections also impressed the firm, featuring a variety of holiday-ready products, including branded apparel (Reebok, NFL merchandise) and popular gift items like toys, plants, and candles. 

Jefferies noted Walmart U.S.’s positive general merchandise comps in Q3—the first since 2022—signaling a potential shift in consumer spending.

Walmart’s competitive pricing strategies are said to further bolster its holiday outlook. 

Jefferies highlighted "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. 

Analysts noted Walmart’s price gaps, especially in private labels, remain strong without significantly impacting margins. 

For example, they state that 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 is considered another bright spot, with Walmart Canada reporting 27% e-commerce sales growth for the second consecutive quarter. During the visit, 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.

Source: Investing.com