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Walmart (WMT+0.88%) has delivered an exceptional year that has transformed its market position. The retailer’s shares surged more than 80% in 2024, pushing its market value to $768 billion after adding $340 billion in market capitalization. The retail giant’s exceptional performance has been driven by its success in attracting wealthier shoppers and growth in advertising and marketing revenue, allowing it to emerge as one of the top performers on the S&P 500 Consumer Staples Index.
While inflation has challenged most retailers in 2024, Walmart has turned market headwinds into an advantage, delivering its strongest performance since 1998. The retailer’s share price gains and margin growth have outpaced most traditional retail competitors, drawing comparisons to higher-growth industries.
Keith Buchanan, senior portfolio manager at GLOBALT Investments, told Bloomberg that Walmart’s stock “looks more like something that’s technologically oriented,” referring to its robust growth and profitability, which rival those of the historically high-performing tech giants.
This tech-like performance comes as Walmart ramps up its digital capabilities. With its continued investment in technology, product offerings, and supply chain operations, Baird analysts project Walmart will compete directly with Amazon in the coming years.
This positioning highlights Walmart’s influence as it continues to attract shoppers of all income cohorts – especially wealthier ones. In the most recent quarter, around 75% of Walmart’s sales came from households earning $100,000 a year or more.
To court those more affluent shoppers, Walmart has modernized its stores with refreshed layouts, expanded product assortments, and improved lighting while rolling back prices on more than 7,000 items to maintain momentum with budget-conscious customers.
“Walmart has found a sweet spot,” Greg Zakowicz, senior e-commerce expert at software company Omnisend, told Quartz in an interview. “It’s successfully serving both higher-income shoppers looking to save on groceries and lower-income shoppers seeking the best value.”
These updates have positioned Walmart to compete across the retail spectrum. While its enhanced shopping experience puts pressure on Target (TGT+0.05%) and Amazon (AMZN+2.42%), the company is also targeting the discount retail space. Citigroup’s (C+2.27%) Paul Lejuez suggests that Walmart’s expanded offerings and focus on delivery, coupled with its Walmart+ Assist program for low-income customers, will allow it to take market share from retailers like Dollar General (DG-0.95%). Earlier this month, Dollar General said it would test same-day delivery at 75 locations to keep up with Walmart.
Moreover, Walmart’s reliance on its advertising and membership revenue, which make up nearly one-third of its operating income, has given it room to reduce prices while growing its margins. RBC Capital Markets (RY+0.27%) analyst Steven Shemesh noted that these pursuits set Walmart apart from other retailers struggling to achieve similar growth.
That said, not all analysts expect Walmart’s gangbusters year to extend into 2025. Redburn Atlantic analyst Daniela Nedialkova warns that given macroeconomic pressures, next year may not replicate the stellar stock gains seen this year.