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Apr 22, 2020
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About this Deal

Walmart Inc. WMT has always been working toward enhancing operations by shifting focus on areas with strong potential. Incidentally, there have been rounds about the company planning to sell its Vudu streaming platform to Fandango, owned by Comcast Corporation. Sources revealed that Walmart is undertaking this move to prioritize key growth areas like omnichannel retail.

Well, Walmart had acquired Vudu in 2010 to offer its customers access to TV shows and movies online. However, it looks like Vudu could not gain as much viewership as other online streaming names like Amazon Prime and Netflix, per various media reports. Hence, the potential sale of Vudu to Fandango appears to be appropriate as it will help Walmart increase focus on its omnichannel retail business, which has been gaining traction for quite some time now.

Nonetheless, sources said that customers of Vudu can still use their Walmart logins and will continue to have access to their TV and movie libraries. Also, Vudu's technology will keep powering Walmart's online digital TV and movie store.

Omnichannel Retail — Walmart’s Core Strength

Walmart has been gaining from its solid efforts to evolve with the changing consumer environment. In this regard, the company has been taking several e-commerce initiatives, including buyouts, alliances, and improved delivery and payment systems. The company’s contracts with Green Dot and Microsoft; buyouts of ShoeBuy, Moosejaw, Bonobos, ModCloth and Jet.com; and deal with Lord and Taylor, among others, are noteworthy. Further, the buyout of the 77% stake in Flipkart has been bolstering its e-commerce sales.

Apart from this, Walmart is making aggressive efforts to expand in the booming online grocery space, which has long been a major contributor to e-commerce sales. To this end, the company unveiled the Delivery Unlimited membership option for 1,400 U.S. stores during the third quarter of fiscal 2020. Also, it launched Walmart InHome Delivery across three markets and same-day pickup at all of Mexico’s Sam’s Club locations. Prior to this, it joined hands with Point Pickup, Skipcart, AxleHire and Roadie. Also, Walmart’s alliance with Jet.com and Blue Apron to provide on-demand meal kits is noteworthy.

In an earlier development, the company inked a deal with Postmates to extend its online grocery delivery service to cover more than 40% of the families in the United States. Other than this, the company’s contract with DoorDash and acquisition of Parcel highlight its focus on enhancing grocery sales. Further, the Walmart Pickup program enables customers to place orders online and then pick them up at a store for free. In the past, the company also partnered with ride-hailing services, Uber and Lyft, for speedy online grocery deliveries, while it also tested same-day delivery with Deliv.

We believe that these actions help Walmart offer multiple choices to online grocery shoppers amid increasing competition from Amazon AMZN. In fact, the robust omnichannel setup is also helping it cater well to customers’ burgeoning demand for essentials, as they are stockpiling amid the growing coronavirus spread. Other retail bellwethers like Kroger KR and Dollar Tree DLTR are also witnessing a spike in demand owing to the pandemic-led panic buying.

Coming back to Walmart, we expect this supermarket giant to keep gaining from its concerted efforts to boost the omnichannel business. This Zacks Rank #3 (Hold) company’s shares have gained 8.8% year to date compared with the industry’s growth of 8.4%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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