What To Expect From Wal-Mart’s 2016 Holiday Sales?

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The holiday season in the U.S. (November-December) is the busiest time of the year for retailers. Despite the prevalent lull in the retail domain, there is a significant increase in consumer spending during the holiday season every year.

In 2015, Wal-Mart‘s (NYSE:WMT) total revenue during the holiday season registered a decline of 1.4% year-over-year (y-o-y) to 129.7 billion, while the overall growth in retail sales was flat. This was primarily due to a shift of consumer gifting preference from traditional gifts to gifts of travel and entertainment, as well as a growing affinity towards online shopping. We expect this trend to follow in the 2016 holiday season as well, since Wal-Mart still relies on store sales, which could be negatively impacted by the ongoing customer shift from store to online shopping. The industry-wide e-commerce sales during the holiday season 2016 are expected to increase 17.2% y-o-y to $94.71 billion [1], largely benefiting the internet retailers such as Amazon (NASDAQ:AMZN). Although Wal-Mart is investing heavily in its e-commerce initiatives, it would take some time for the company’s online growth to have a significant impact on overall results. In addition to the general online shift, extreme weather conditions could also refrain consumers from visiting the stores, which could further add to Wal-Mart’s store traffic concerns.

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(We have calculated Wal-Mart’s holiday sales for November and December with an assumption that 67% of the revenue from its fourth quarter totals out to the holiday sales for that year).

Wal-Mart’s retail market share during the holiday season declined by 60 basis points between 2012 and 2015. Looking at the declining trend and the aforementioned aspects, we expect Wal-Mart’s retail market share to decline further and approximately reach 14.1% in 2016.

 

Have more questions about Wal-Mart? Please refer to our complete analysis for Wal-Mart

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Notes:
  1. Holiday Retail Online Sales Will Grow, eMarketer.com, Oct 2016 []