Tags: Warren Buffett | Wal-Mart | Amazon | Berkshire Hathaway

Did Warren Buffett Just Bury Wal-Mart With His Stock Sale?

Did Warren Buffett Just Bury Wal-Mart With His Stock Sale?

(AP)

By    |   Wednesday, 15 February 2017 11:11 AM

Warren Buffett, the billionaire chairman and chief executive of Berkshire Hathaway Inc., sold off 90 percent of its holdings of Wal-Mart Stores Inc., the biggest private employer in the U.S.

The stock sale left Berkshire with about 1 million shares at the end of December, begging the question: Does Buffett see no future for the world’s biggest retailer?

As mobile technology allows consumers greater power to comparison-shop while walking through brick-and-mortar stores, online retailers have the ability to intrude into Wal-Mart’s aisles of electronics, hardware and appliances. Meanwhile, dollar stores are going after low-income, cash-paying customers who don't have bank accounts or credit cards.

Mark Astrachan, a retail analyst at Stifel Nicolaus & Co., estimates that Wal-Mart’s sales will grow 1 percent to 2 percent this year among stores that have been open for at least 12 months. He doesn’t see much upside to the stock, with a 12-month price target of $70 based on estimates of Wal-Mart’s earnings growth. Wal-Mart fell 0.3 percent to $68.47 a share by mid-day Wednesday.

Astrachan said the most important way for Wal-Mart to resist the threat of Internet retailing giant Amazon.com Inc. is with grocery sales.

“Although we believe Amazon is a competitive threat over the long term, Wal-Mart’s exposure to categories that are less sensitive to online selling, particularly grocery, insulates results in the near-to-medium term,” Astrachan said in a Jan. 19 report obtained by Newsmax Finance. “Longer term, successfully combining brick-and-mortar stores with a solid online platform should help Wal-Mart stay relevant against Amazon and other online retailers.”

Wal-Mart plans to radically change the way its customers grocery shop as the big-box giant aggressively expands its online pickup services around the country.

While tech and e-commerce companies like Google and Amazon are considering grocery-delivery models, Wal-Mart's advantage is having a network of 4,600 stores as a starting point, according to The Washington Post.

In the last year, Wal-Mart has grown its online grocery pickup program from five markets to more than 80 around the nation, the newspaper noted.

"We see a huge opportunity through pickup, particularly in grocery," Doug McMillon, Wal-Mart's chief executive, told investors last year. "The combination of digital relationship and stores is a winner."

Wal-Mart also sought to bolster its online presence in August when it signed a $3.3 billion deal to purchase young online retailer Jet.com Inc., according to The Wall Street Journal.

Berkshire's stock holdings were revealed on Monday in a government filing.

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Warren Buffett, the billionaire chairman and chief executive of Berkshire Hathaway Inc., sold off 90 percent of its holdings of Wal-Mart Stores Inc., the biggest private employer in the U.S.
Warren Buffett, Wal-Mart, Amazon, Berkshire Hathaway
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2017-11-15
Wednesday, 15 February 2017 11:11 AM
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