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Walmart says it’s ready for holidays — but hasn’t yet seen huge wave of early shoppers

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November 16, 2021
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Jonathan Mary fixes the sign indicating that there are 30 more days until Christmas at a Walmart store in Miami, Florida.

Joe Raedle/Getty Images

Retailers are betting fears of out of stocks and shipping delays will inspire people to hit the mall, stores and websites and hunt for gifts earlier this holiday season.

That wave of seasonal shoppers hasn’t yet arrived at Walmart, however, according to Walmart Chief Financial Officer Brett Biggs. He told CNBC the company has seen some holiday shoppers, but not enough to pull forward significant demand into the third quarter.

Unlike two of its key competitors, Amazon and Target, Walmart did not kick off its holiday deals in October. Instead, its Black Friday sales will be spread across November. Target began its holiday push with a “deals days” event online and in stores from Oct. 10 to 12. Amazon tried to hook shoppers early by throwing a three-week beauty event that started in early October.

For Walmart, the delay of holiday promotions could be a strategic one. Walmart drummed up more business for grocery, its core business, in the third quarter. Grocery sales rose nearly 10% year over year in the three-month period, thanks in part to low to mid single-digit inflation. Food sales grew $3.6 billion in the third quarter — the strongest quarterly growth in six quarters, the company said.

The big-box retailer is also trying to strike a balance by passing on some higher costs to customers, while absorbing others to make sure it undercuts competitors’ prices and maintains its reputation for value, CEO Doug McMillon said in an interview on CNBC’s “Squawk on the Street” with Jim Cramer.

A strategic decision?

Michael Baker, a retail analyst for D.A. Davidson, said Walmart may be offsetting its aggressive grocery prices by postponing its biggest holiday promotions on TVs and more until later in the season.

“That could be part of the strategy to not have that level of promotion earlier,” he said.

Holiday sales are expected to rise by between 8.5% and 10.5%, for a total of between $843.4 billion and $859 billion of sales — an all-time record, according to the National Retail Federation. The trade group said rising household incomes, high savings ratings and pent-up demand to celebrate will support that outlook.

The pandemic has shaken up the cadence of the season. Last year, major retailers kept their doors shut on Thanksgiving Day and pushed up the start of their biggest holiday sales to near Halloween to try to tamp down on crowds. They also promoted new ways to shop, such as curbside pickup.

This year, some retailers have continued those traditions with shuttered stores on Thanksgiving and early sales for another reason — to stagger demand as congested ports and a shortage of truck drivers means thinner inventory in some areas.

Walmart’s decision to hold back holiday promotions until November didn’t hurt its third-quarter earnings. The company topped analysts’ expectations and raised its forecast for the rest of the year.

When more holiday shoppers come to its stores and website, Walmart will be ready, Biggs said. Its inventory is up 11.5% ahead of the season. It ordered merchandise early, chartered dedicated ships for Walmart goods and directed them to less congested ports, he said on an earnings call.

Staying in stock

Walmart U.S. CEO John Furner said customers will see the difference when they shop. Last year, he said, the company relied on merchandise like snacks and beverages to fill in emptier shelves.

“We see customers who are celebrating,” he said on an earnings call, referring to both Halloween and Thanksgiving. “I’ve been out in stores around the country and our feature mix looks much better than a year ago. We definitely have a holiday feel.”

He said Walmart has an advantage because about two-thirds of its merchandise is sourced from the U.S., so it can skip over the jammed-up ports entirely.

D.A. Davidson’s Baker said holiday sales are still in early innings. He said he expects big-box retailers like Walmart and Target to fare better than other retailers because consumers will feel more confident they can find what they want — or at least a good substitution. Plus, he said, those retailers have a big footprint of stores that allow shoppers to grab that desired item rather than waiting around and wondering when a package might arrive — or if something could sell out.

“Customers are going to understand that the bigger retailers do have a better chance of having the products they want in stock and navigating the supply chain issues,” he said. “People don’t have to be in the finance world now to understand what’s going on with the supply chain. It’s on the news every night. So people get it. People know that a lot of places are going to have out of stocks.”

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