Walmart shows strength in all sectors

(i) Many have labeled Walmart and larger retailers such as Carrefour, Costco, Schwartz Group, and Kroger (to name a few) as dinosaurs that can barely survive in the digital world(ii). Negative forecasts have not come true so far.

It’s more like big gets bigger (there are exceptions), faster and better – both in the store and in distribution. We see this all over the world, and value development at Walmart has rarely, if ever, been better.

Multi-channel players

More specifically, critics imagined that online shopping would become the new mass thing thirty years ago. The consulting firm Andersen Consulting, now Accenture PLC, established so-called “stores of the future” in London and Chicago in the 1990s that showed the future of home grocery deliveries. (iii) Andersen’s predictions were completely wrong.

Online grocery shopping still accounts for a small part of grocery turnover; an estimated 4 percent in Sweden and 11 percent in the UK. The point is that most people still prefer brick-and-mortar stores, and the established players are in the best locations, have the size, the negotiating power to impose prices on suppliers and, last but not least, the marketing power.

The author of this article believes that stationary stores will have a strong position in the near future. There are also grounds to believe that market share will be taken over by multi-channel players with both stationary and online stores.

As the Norwegian Oda shows, it is extremely difficult to set up an “independent” online grocery store. It’s possible, of course, but you burn a lot of cash along the way and it will take a long time before you break even, if at all.

Walmart’s CEO is positive about the future

Looking ahead, the Company issues second quarter guidance and expects net sales to increase by 3.5% to 4.5% and operating income to increase by 3.0% to 4.5%, on a constant currency basis.

The company currently expects to top out at or slightly above its prior guidance for net sales growth of 3.0% to 4.0% and operating income growth of 4.0% to 6.0% in fiscal year 2025.

“Our team played a great quarter. Globally, our goal is simple – we focus on saving our customers money and time. It’s inspiring to see our associates simultaneously cover the basics and innovate to make shopping with us more enjoyable and convenient. We are driven by people and technology, and this combination powers our business,” said president and CEO Doug McMillion in a May 16 press release.

The most important events of the first quarter

• Consolidated revenues of $161.5 billion, up 6.0%.
• Consolidated gross margin rate increased 4.2% driven by improvement across all segments, led by Walmart US
• Consolidated operating income increased $0.6 billion, or 9.6%, due to higher gross margins and membership revenue growth.
• Global e-commerce sales increased 21%.
• About 18 percent of total turnover is generated outside the US.

“Our strong performance this quarter demonstrates the strength of our global retail capabilities and the team’s ability to be disciplined. As we continue to transform our business model, we are focused on strategic investments in areas that strengthen our purpose and growth strategy, says John David Rainey, CFO and vice president.

Quick overview

Walmart operates more than 4,600 stores in the United States (5,200 including Sam’s Club) and more than 10,000 stores worldwide.

• Walmart generated $641 billion in sales in 2023
• The retailer serves approximately 240 million customers worldwide every week.
• Headquarters Bentonville, USA
• Number of employees 2,100,000
• Market value approximately USD 521 million

Sources: Walmart Inc., NHH, Nordnet, Economist, FT.

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