Walmart (WMT) to Buy EVs From Canoo for Online Order Deliveries
Walmart Inc. WMT has been doing every bit to enhance its delivery services, thereby boosting e-commerce sales and enriching customers’ experiences. Taking another step in this direction, the omnichannel retailer inked a deal with Canoo Inc. GOEV to buy 4,500 all-electric delivery vehicles, with a choice of buying up to 10,000 units.
The vehicles purchased from GOEV will be utilized to deliver online orders sustainably, helping Walmart meet its zero-emission goal by 2040. WMT will begin with buying the Lifestyle Delivery Vehicle (“LDV”), which is likely to hit the road in 2023. However, Walmart and Canoo intend to undertake advanced deliveries to enhance and confirm vehicle configuration in the Dallas-Fort Worth metroplex in the coming weeks.
Canoo is a high-tech advanced mobility company and its LDV is an all-American commercial electric vehicle (“EV”), which is perfectly suited for sustainable last-mile delivery. The LDV is designed for increased-frequency stop-and-go deliveries and fast vehicle to door drop-off, including food/meal and grocery delivery. Its interiors are engineered for small package delivery at reasonable rates.
Canoo’s EVs will be driven by Walmart workers and utilized to fulfill online orders, ranging from general merchandise to groceries. It also has the potential to be used for Walmart GoLocal, which is the company’s delivery-as-a-service business. This is likely to help Walmart up its delivery game.
Walmart Focused on Strengthening Delivery Services
Walmart has taken robust strides to strengthen its delivery arm, evident from its expansion of the InHome delivery service, investments in DroneUp, a pilot with HomeValet, the introduction of Carrier Pickup by FedEx, the launch of the Walmart+ membership program, drone delivery pilots in the United States with Flytrex and Zipline and a pilot with Cruise to test grocery delivery through self-driven all-electric cars.
Walmart also unveiled an alliance with DoorDash in the third quarter of fiscal 2021 to deliver prescriptions from the pharmacies of Sam’s Club alongside expanding Scan & Go to all fuel stations at U.S. Sam’s Clubs. Before this, WMT unveiled Express Delivery and joined forces with Point Pickup, Roadie and Postmates alongside acquiring Parcel to enhance its delivery service.
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Wrapping Up
The industry is currently grappling with supply-chain bottlenecks, and Walmart is not fully immune to these headwinds. The gross margin at Walmart U.S. fell 38 basis points (bps) in the first quarter due to an adverse product mix, high supply-chain costs and increased markdowns. Most of the decline was due to supply-chain, fuel and e-commerce fulfillment expenses. Overall, this Zacks Rank #5 (Strong Sell) company’s consolidated gross profit margin contracted by 87 bps, primarily due to Sam’s Club, wherein the gross margin fell 219 bps. This was attributable to supply-chain costs, a fuel mix, inflation and markdowns stemming from the delayed inventory. Management expects the gross margin to remain under pressure in the second quarter, though it is likely to improve sequentially.
Shares of the company have declined 20.2% in the past three months compared with the industry’s drop of 19.9%. However, moves like the abovementioned tie-up with Canoo are likely to bolster Walmart’s delivery services and boost its e-commerce sales.
Solid Retail Bets
Here are some better-ranked stocks – Dollar Tree DLTR and Kroger KR.
Dollar Tree, a discount variety retail store operator, sports a Zacks Rank #1 (Strong Buy). The company has an expected earnings per share (EPS) growth rate of 15.5% for three to five years. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Dollar Tree’s current financial-year sales suggests growth of 6.7% from the year-ago period. DLTR has a trailing four-quarter earnings surprise of 13.1%, on average.
Kroger, which is a renowned grocery retailer, carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 20.3%, on average.
The Zacks Consensus Estimate for Kroger's current financial-year sales suggests growth of 6.7% from the year-ago period. KR has an expected EPS growth rate of 11.3% for three to five years.
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