The price is quite cheap and the business prospects are still quite good. They have a solid competitive position in the physical store retail industry and lots of opportunity to grow in e-commerce.
The recent drop in price was due to comments made from the company regarding making large investments in e-commerce and employees which will have an impact on earnings for the near future. While the market viewed this as a negative, I feel this is a strong positive. The company needs to have a stronger e-commerce presence in order to maintain their dominance in retail. Using their massive infrastructure they seem to stand the best chance to compete against Amazon.com in e-commerce.
It seems that pure play retailers are at an increasing risk of being nonessential. With more consumers making purchases online and a few strong retailers such as Amazon.com and Walmart gaining more and more customers and getting increasingly aggressive with keeping costs down including shipping, it will be hard for other retailers to compete both Amazon and Walmart as well as others allow manufacturers to ship them product and they handle the orders and customer service. It seems that with this trend, most other retailers will not be needed. I expect to see more consolidation in retail and that Walmart will maintain a solid presence.
The recent price dip makes a great opportunity to get a piece of this strong company. I initiated a position today.