Latest news with #SimeonGutman
Yahoo
30-06-2025
- Business
- Yahoo
What the $1 trillion rural wallet means for Walmart, Amazon
The $1 trillion battle for America's back roads is heating up, with Amazon (AMZN) and Walmart (WMT) at the forefront. The two retail giants are aggressively expanding their e-commerce and delivery capabilities across rural communities, hoping to unlock a largely underserved slice of consumer spending. "Rural consumers spend more than you think," Morgan Stanley analysts said in a new report. The firm notes that the US rural market represents a $1 trillion opportunity in personal goods consumption, with rural households spending roughly 95% of what urban consumers do. Nearly 45 million Americans live in rural counties. According to the Bureau of Labor Statistics' 2023 Consumer Expenditure Survey, excluding autos and gas, rural consumers account for around one-fifth of US personal goods consumption. "Rural consumers have been on the sidelines, waiting days or even weeks for basic goods that urban shoppers get in hours," said Jerry Sheldon, vice president of research and advisory firm IHL Group. "That's about to change." Walmart's stock is up 44% in the past year and 8% year to date as it gained further traction with inflation-weary shoppers across the income spectrum. Amazon stock has jumped 13% over the past year, but only 1% in 2025. "What makes the rural push so crucial right now is that both Amazon and Walmart are ramping up investment at the same time, more aggressively than ever before," Morgan Stanley's Simeon Gutman said in an email. "They've each been citing rural expansion repeatedly on recent earnings calls. That's the signal that really matters." Both companies are trading far above the S&P 500's (^GSPC) average price-to-earnings ratio, which requires them to continue to perform financially to keep investors' interest. Walmart has a head start in the rural market with its vast store network, affordable inventory, and grocery dominance, Morgan Stanley said. Its same-day delivery now covers 93% of the US population, up from 76% two years ago, and is expected to reach 95% by the end of 2025. Amazon, meanwhile, is betting that its speed, logistics know-how, and ability to innovate will close that gap. It's investing $4 billion through 2026 to beef up its rural delivery footprint to reach 4,000 rural US locations. "Companies are always chasing growth, and this is clearly a major opportunity. While delivery costs are higher at first, as average order increases, those economics start to improve,' Sheldon added. Read more: Is the stock market open on July Fourth? The companies' rise poses a serious challenge to other big box and value retailers, such as Target (TGT), Kroger (KR), Dollar Tree (DLTR), and Albertsons (ACI), according to Morgan Stanley. Retailers with deep rural footprints of their own, like Dollar General (DG) and Tractor Supply (TSCO), also face new pressure. Amazon's expansion into small-town ZIP codes could siphon off value-conscious rural shoppers, who now expect faster, more reliable delivery options. Parcel carriers like FedEx (FDX) and UPS (UPS) could find themselves in the crosshairs. Amazon's move to vertically integrate its delivery network, especially in rural zones where FedEx has historically been stronger, could erode the parcel incumbents' share of residential shipping. Morgan Stanley estimates Amazon and Walmart collectively hold about 20% of the current rural retail market, with Walmart owning the lion's share today thanks to its 3,560 Supercenters, many of which could double as local fulfillment hubs. Roughly 60% of Walmart's US delivery orders are now fulfilled from those hubs, a major efficiency advantage over competitors. KeyBanc analyst Bradley Thomas told Yahoo Finance that Walmart's progress in logistics is a major tailwind for growth and margin expansion. "It's taken 10 years for Walmart to reach this scale," he said. The company is attracting higher-income shoppers as delivery becomes part of its value proposition, much like Amazon Prime. Amazon, on the other hand, still boasts an edge in its breadth of selection and cost-effective delivery of everyday items. In the first quarter, its retail business sales rose 9% year over year to $155.7 billion while operating margin climbed from 10.7% the previous year to 11.8%. Walmart has also delivered a string of earnings beats. For its latest quarter, revenue climbed 2.5% year over year to $165.6 billion. Global e-commerce sales jumped 22%, and operating margins saw a modest improvement. Investors are also watching closely for potential disruption in the grocery and discount segments, where shifts in market share can happen quickly. While the broader market remains stable, interest rates, tariffs, and geopolitical uncertainty remain key wildcards for retail. Francisco Velasquez is an Associate Reporter at Yahoo Finance. You can reach him via LinkedIn and X. Click here for all of the latest retail stock news and events to better inform your investing strategy Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
30-06-2025
- Business
- Yahoo
What the $1 trillion rural wallet means for Walmart, Amazon
The $1 trillion battle for America's back roads is heating up, with Amazon (AMZN) and Walmart (WMT) at the forefront. The two retail giants are aggressively expanding their e-commerce and delivery capabilities across rural communities, hoping to unlock a largely underserved slice of consumer spending. "Rural consumers spend more than you think," Morgan Stanley analysts said in a new report. The firm notes that the US rural market represents a $1 trillion opportunity in personal goods consumption, with rural households spending roughly 95% of what urban consumers do. Nearly 45 million Americans live in rural counties. According to the Bureau of Labor Statistics' 2023 Consumer Expenditure Survey, excluding autos and gas, rural consumers account for around one-fifth of US personal goods consumption. "Rural consumers have been on the sidelines, waiting days or even weeks for basic goods that urban shoppers get in hours," said Jerry Sheldon, vice president of research and advisory firm IHL Group. "That's about to change." Walmart's stock is up 44% in the past year and 8% year to date as it gained further traction with inflation-weary shoppers across the income spectrum. Amazon stock has jumped 13% over the past year, but only 1% in 2025. "What makes the rural push so crucial right now is that both Amazon and Walmart are ramping up investment at the same time, more aggressively than ever before," Morgan Stanley's Simeon Gutman said in an email. "They've each been citing rural expansion repeatedly on recent earnings calls. That's the signal that really matters." Both companies are trading far above the S&P 500's (^GSPC) average price-to-earnings ratio, which requires them to continue to perform financially to keep investors' interest. Walmart has a head start in the rural market with its vast store network, affordable inventory, and grocery dominance, Morgan Stanley said. Its same-day delivery now covers 93% of the US population, up from 76% two years ago, and is expected to reach 95% by the end of 2025. Amazon, meanwhile, is betting that its speed, logistics know-how, and ability to innovate will close that gap. It's investing $4 billion through 2026 to beef up its rural delivery footprint to reach 4,000 rural US locations. "Companies are always chasing growth, and this is clearly a major opportunity. While delivery costs are higher at first, as average order increases, those economics start to improve,' Sheldon added. Read more: Is the stock market open on July Fourth? The companies' rise poses a serious challenge to other big box and value retailers, such as Target (TGT), Kroger (KR), Dollar Tree (DLTR), and Albertsons (ACI), according to Morgan Stanley. Retailers with deep rural footprints of their own, like Dollar General (DG) and Tractor Supply (TSCO), also face new pressure. Amazon's expansion into small-town ZIP codes could siphon off value-conscious rural shoppers, who now expect faster, more reliable delivery options. Parcel carriers like FedEx (FDX) and UPS (UPS) could find themselves in the crosshairs. Amazon's move to vertically integrate its delivery network, especially in rural zones where FedEx has historically been stronger, could erode the parcel incumbents' share of residential shipping. Morgan Stanley estimates Amazon and Walmart collectively hold about 20% of the current rural retail market, with Walmart owning the lion's share today thanks to its 3,560 Supercenters, many of which could double as local fulfillment hubs. Roughly 60% of Walmart's US delivery orders are now fulfilled from those hubs, a major efficiency advantage over competitors. KeyBanc analyst Bradley Thomas told Yahoo Finance that Walmart's progress in logistics is a major tailwind for growth and margin expansion. "It's taken 10 years for Walmart to reach this scale," he said. The company is attracting higher-income shoppers as delivery becomes part of its value proposition, much like Amazon Prime. Amazon, on the other hand, still boasts an edge in its breadth of selection and cost-effective delivery of everyday items. In the first quarter, its retail business sales rose 9% year over year to $155.7 billion while operating margin climbed from 10.7% the previous year to 11.8%. Walmart has also delivered a string of earnings beats. For its latest quarter, revenue climbed 2.5% year over year to $165.6 billion. Global e-commerce sales jumped 22%, and operating margins saw a modest improvement. Investors are also watching closely for potential disruption in the grocery and discount segments, where shifts in market share can happen quickly. While the broader market remains stable, interest rates, tariffs, and geopolitical uncertainty remain key wildcards for retail. Francisco Velasquez is an Associate Reporter at Yahoo Finance. You can reach him via LinkedIn and X. Click here for all of the latest retail stock news and events to better inform your investing strategy
Yahoo
17-06-2025
- Business
- Yahoo
PDD Holdings' (PDD) Temu Experiences a Whopping 48% Drop in Daily US Users in May
PDD Holdings Inc. (NASDAQ:PDD) is one of the 13 Most Undervalued Retail Stocks to Buy Right Now. On June 4, Reuters reported that the global discount e-commerce platform Temu, which is owned and operated by PDD Holdings Inc. (NASDAQ:PDD), reported a notable 48% drop in its daily US users in May compared to March. The drop occurred after the United States closed the 'de minimis' loophole on May 2, which allowed Chinese companies to deliver low-value packages to the United States without incurring tariff obligations. A close-up of a customer using the company's e-commerce platform whilst shopping online. The closure of de minimis led to Temu slashing its ad spending in the United States and shifting its strategy associated with order fulfillment. Engagement on the platform dropped considerably after the end of the exemption, as stated by Simeon Gutman, Morgan Stanley equity analyst, in a May note. Gutman further stated: 'While the tariff environment is uncertain, if the status quo remains for an extended period, we believe Temu's competitive threat will continue to weaken.' PDD Holdings Inc. (NASDAQ:PDD) is a Chinese multinational online commerce group and retailer that owns and operates a range of diverse businesses. It also has a strong logistics, sourcing, and fulfillment capabilities network that supports its operations. The company owns Pinduoduo, a popular online commerce platform in China, and also runs the fast-growing e-commerce marketplace Temu. Temu now operates in more than 50 countries worldwide. While we acknowledge the potential of PDD as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money. Disclosure: None.
USA Today
04-06-2025
- Business
- USA Today
Temu sees 48% drop in US users after de minimis loophole ends
Temu sees 48% drop in US users after de minimis loophole ends Show Caption Hide Caption Shein, Temu warn US shoppers of higher prices ahead The days of cheap Chinese goods by post are coming to an end for U.S. shoppers. Reuters Daily U.S. users of PDD Holdings' PDD.O global discount e-commerce platform Temu fell by 48% in May compared to March, according to market intelligence firm Sensor Tower, one of many headwinds the e-retailer is facing amid a U.S.-China trade war. Temu decided to slash ad spending in the U.S. and shift its order fulfillment strategy after the White House on May 2 ended the practice known as "de minimis" which allowed Chinese companies to ship low-value packages to the United States tariff-free. Temu, along with fast-fashion giant Shein, had utilized that provision for years to drop-ship items directly from suppliers in China to consumers in the U.S., keeping prices low. Both Temu and Shein have suffered a sharp drop in sales growth and customer growth rates since U.S. President Donald Trump announced sweeping trade tariffs, according to data collected by consultancy Bain & Company, but Temu's trends have been worse than its rival. In case you missed it: Shein, Temu prices have gone up. We tracked some items to see how much. Tariffs forced both platforms to raise prices, but Shein has been able to increase the amount of money spent per customer compared to a year ago, the data showed, while Temu has struggled. Temu did not respond to a request for comment on the drop in U.S. daily users or the headwinds it faces in the U.S. market. Engagement on Temu has dropped significantly following the end of the exemption, Morgan Stanley equity analyst Simeon Gutman said in a May note. "While the tariff environment is uncertain, if the status quo remains for an extended period, we believe Temu's competitive threat will continue to weaken," Gutman said. Last week, PDD's first quarter earnings fell short of growth estimates and executives told analysts on a post-earnings call that tariffs had created significant pressure for its merchants. They reiterated Temu's earlier pledge to keep prices stable and work with merchants across regions, referring to a shift to a local fulfillment model announced at the start of May. Temu's previous business model gave merchants responsibility for ordering and supplying their products while the China-based company managed most of the logistics, pricing and marketing. Now, Temu's merchants "can ship individual orders from China to Temu-partnered U.S. warehouses but they would need to address tariffs and customs charges and paper work," according to a note from analysts at HSBC. Temu continues to handle fulfilling orders close to shoppers, setting prices and online operations. In last week's note, HSBC said that Temu's growth in non-U.S. markets has picked up, with non-U.S. users rising to 90% of its 405 million global monthly active users in the second quarter. "New user uptick grew swiftest in less affluent markets," analysts wrote. Reporting by Casey Hall in Shanghai and Arriana McLymore in New York City, additional reporting by Helen Reid in London; Editing by Nia Williams
Time of India
03-06-2025
- Business
- Time of India
Retailer Temu's daily US users halve following end of 'de minimis' loophole
HighlightsDaily U.S. users of PDD Holdings' global discount e-commerce platform Temu fell by 58% in May due to the impact of tariffs and a shift in fulfillment strategy following the end of the 'de minimis' exemption. Temu's sales growth has significantly lagged behind its competitor, Shein, which has managed to increase customer spending despite the challenging tariff environment. PDD Holdings reported disappointing first quarter earnings, indicating that the new tariff pressures have created significant challenges for its merchants, leading to a shift towards a local fulfillment model. Daily U.S. users of PDD Holdings ' global discount e-commerce platform Temu fell by 58% in May, according to market intelligence firm Sensor Tower, one of many headwinds the e-retailer is facing amid a U.S.-China trade war. Temu decided to slash ad spending in the U.S. and shift its order fulfilment strategy after the White House on May 2 ended the practice known as "de minimis" - which allowed Chinese companies to ship low-value packages to the United States tariff-free. Temu, along with fast-fashion giant Shein , had utilised that provision for years to drop-ship items directly from suppliers in China to consumers in the U.S., keeping prices low. Both Temu and Shein have suffered a sharp drop in sales growth and customer growth rates since U.S. President Donald Trump announced sweeping trade tariffs , according to data collected by consultancy Bain & Company, but Temu's trends have been worse than its rival. Tariffs forced both platforms to raise prices, but Shein has been able to increase the amount of money spent per customer compared to a year ago, the data showed, while Temu has struggled. Temu did not respond to a request for comment on the drop in U.S. daily users or the headwinds it faces in the U.S. market. Engagement on Temu has dropped significantly following the end of the exemption, Morgan Stanley equity analyst Simeon Gutman said in a May note. "While the tariff environment is uncertain, if the status quo remains for an extended period, we believe Temu's competitive threat will continue to weaken," Gutman said. Last week, PDD's first quarter earnings fell short of growth estimates and executives told analysts on a post-earnings call that tariffs had created significant pressure for its merchants. They reiterated Temu's earlier pledge to keep prices stable and work with merchants across regions, referring to a shift to a local fulfilment model announced at the start of May. Temu's previous business model gave merchants responsibility for ordering and supplying their products while the China-based company managed most of the logistics, pricing and marketing. Now, Temu's merchants "can ship individual orders from China to Temu-partnered U.S. warehouses but they would need to address tariffs and customs charges and paper work," according to a note from analysts at HSBC. Temu continues to handle fulfilling orders close to shoppers, setting prices and online operations. In last week's note, HSBC said that Temu's growth in non-U.S. markets has picked up, with non-U.S. users rising to 90% of its 405 million global monthly active users in the second quarter. "New user uptick grew swiftest in less affluent markets," analysts wrote.
