Walmart Connect ad growth offsets sales slowdown

Walmart's same-store sales growth has slowed to 4.1% in the quarter ended April 30, and its annual outlook is cautious, pressuring the stock. However, investors are increasingly focusing on Walmart — Walmart Connect, the retailer's advertising business, which surged 44% in that quarter, its fastest pace since reporting began in Q1 2023. Walmart — Walmart Connect leverages shopper data from its membership program to help brands target consumers across its website, app, and stores, and it contributes about a third of operating income despite being a small fraction of Walmart's $713 billion in annual sales. Analysts expect similar growth for Connect in the quarter ending July 31, even as same-store sales growth is projected to slip below 4%. Walmart is expanding Connect through AI tools, testing ads in its AI shopping assistant Sparky, and using its 2024 acquisition of Vizio to extend into streaming television. The business is seen as increasingly akin to Amazon (company)'s advertising platform, though still much smaller. Walmart shares are up 2.6% this year, lagging the S&P 500's 13% gain.