Wal-Mart stores Inc cutting prices, jobs to compete with Amazon.com

Wal-Mart Stores Inc has announced its latest aggressive move to fight back against increasing online competition from Amazon.com (AMZN).

This week, Wal-Mart said it will be cutting hundreds of additional jobs and lowering certain online prices, but Wall Street still has mixed feelings about the retail giant's long-term prospects.


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On April 19, Wal-Mart will launch its new pickup discount program, which will offer customers lower prices on roughly 10,000 products they can buy online and then pick up at a local store. The program allows Wal-Mart to pass along the savings it generates from avoiding the "last-mile cost" of delivering products directly to customers' homes.

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At the same time, Wal-Mart is also cutting hundreds more jobs as part of its restructuring and refocusing efforts. Wal-Mart has eliminated about 18,000 company positions in the past year, but a spokesperson says many of the employees who held those positions have been retained and reassigned.

Last week, Telsey Advisory Group analyst Joseph Feldman upgraded Wal-Mart from "market perform" to "outperform" and said the company's aggressive investments in e-commerce will eventually pay off for shareholders.

"Our forecast for accelerating growth following a few years of heavy investment to improve the core Wal-Mart U.S. and digital businesses should propel the stock higher over the next few years," Feldman said.

[See: Stock Market Showdown: Target vs. Wal-Mart.]

Still, not all long-term investors are convinced that Wal-Mart has done enough to compete with Amazon.

Billionaire Berkshire Hathaway (BRK.A, BRK.B) CEO and Wall Street legend Warren Buffett has sold nearly all of his $3 billion stake in Wal-Mart since mid-2016. Buffett first bought his stake in Wal-Mart back in 2005.

"How many retailers have really sunk and then come back? Not Many. I can't think of any," Buffett said of Sears Holdings Corp. (SHLD) back in 2005.

At a shareholder meeting last year, Buffett said Amazon is "a big, big force" that has "already disrupted plenty of people and it will disrupt more."

[See: 20 Awesome Dividend Stocks for Guaranteed Income.]

Wal-Mart and its stock are holding up surprisingly well in recent years considering the damage Amazon has done to the rest of the U.S. retail sector. The retail sector lost 61,000 jobs in the past two months alone, its worst two-month stretch since 2009. Despite reporting its first quarter of negative year-over-year sales growth in history in 2016, Wal-Mart shares are down just 3.9 percent over the past three years.

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