Shares in U.S. value retailer Walmart (WMT) were lower today as it sized up a new threat from British discount clothes retailer Primark.
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Tariff Advantage
The firm, owned by FTSE-listed Associated British Foods, is accelerating its U.S. store openings and ramping up its marketing spend as it brings its range of value products such as £4 shorts and jumpers stateside.
The company is looking to take advantage of President Trump’s tariff strategy which includes the scrapping of the “de minimis” duty-free treatment of goods under $800 ordered online from China. This has hurt online fast-fashion sites like Shein and Temu and made Americans looking to save their cents cast around for alternatives.
Primark currently has 475 stores in 18 countries and has built up around $13.4 billion in annual sales without offering an online home delivery option to customers.
It moved into Boston in 2015 and now operates in 33 locations across 13 states. The U.S. currently accounts for around 5% of its overall sales.
Visits to its U.S. website jumped 67.9% year-on-year in January to September, according to analytics firm Semrush.
According to Reuters, helped by new store openings and the move to increase awareness of its brand, Primark’s U.S. sales rose 23% year-on-year in the second half of its financial year ending September 13, up from 17% in the first half.
New Network
Primark opened six stores in its 2024/25 fiscal year – including first-time entries in Texas, in McAllen, and Tennessee, in Memphis – and plans to grow its network to 60 stores by September 2026.
It has signed 18 additional leases, including a first outlet in Minnesota and a flagship in Herald Square, Manhattan.
“The winds are blowing towards stores, even though they are still growing slower than online,” said Aaron Cheris, a Bain consultant in San Francisco. “Lower-income Americans hit by inflation are focusing on essentials. If I’m a value-focused retailer whose assortment is focused on basics, I think I feel better than if I’m a mid-priced retailer focused on stuff to go out.”
That trend has until now helped Walmart and other U.S. value retailers such as Dollar Tree (DLTR) – see below. But long-term that could be challenged by a beefed-up Primark.
If it can build a U.S. business of the size of its European operations then a more intense battle for the low-spending shopper could be on its way.
Is WMT a Good Stock to Buy Now?
On TipRanks, WMT has a Strong Buy consensus based on 29 Buy ratings. Its highest price target is $129. WMT stock’s consensus price target is $115.56, implying a 11.71% upside.
