Walmart loses ‘top pick’ status at Oppenheimer amid pricing, inventory issues
Wolterk

Visits to a number of Walmart locations were enough for Oppenheimer to take Walmart (NYSE:WMT) off of its top pick list for 2022.

A team of analysts from the bank told clients on Thursday that trips to stores in northern New Jersey revealed a high level of markdown activity across categories, suggesting the retailer still struggles with high inventory levels. As such, margins are likely still compressed in the current quarter after featuring as a significant sore spot in the companyâs most recent earnings report. 

âOverall, based on our observations, we believe the markdowns could be higher than management planned, especially in the apparel category,â the team told clients. âWe noted
high inventory in some prominent displays in areas such as grills, pools, and other seasonal items. This suggests there could be ongoing margin risks in these categories later in the season.â

To be sure, Walmart (WMT) was still rated âOutperformâ and a price target of $165 suggests significant upside. The analysis pointed to better cost controls and market share gains in grocery items as likely mitigating factors. 

Nonetheless, the concern on these issues changed the teamâs thinking with regard to their top picks. In the end, Walmart (WMT) was removed from the list and replaced by Costco (COST) and Dollar General (DG).
Read more on the latest cost control actions taken by the behemoth of Bentonville, Arkansas.