Walmart Lowers Projected Profits; Doug McMillon Discusses Shifting Strategy
- by Melissa De Leon Chavez
BENTONVILLE, AR - During its annual investor meeting, Walmart’s President and CEO Doug McMillon voiced a surprising sentiment for one of grocery’s biggest players. While Walmart’s leadership team discussed how the company is shaping its future, moving with speed, and innovating for tomorrow, McMillon also told investors to “expect [Walmart] to test a lot and fail a lot.”
The CEO also announced that Walmart was lowering its earnings forecast for the year, noting its e-commerce growth next year would not be as incremental as this fiscal year ending in January. Specifically, Walmart revealed its earnings would be taking a hit from its $16 billion acquisition of Flipkart, which Walmart had initially expected to affect earnings by only 25 to 30 cents. Following the meeting, Walmart’s shares were up 2.1 percent at $95.85 per share, according to a report by ET Retail, despite its less-than-ideal forecast.
“We’re adapting and transforming with speed to better serve our existing customers and reach new ones,” McMillon said in a press release prior to the meeting. “We’re operating with discipline, balancing our short- and long-term opportunities. While we’re excited about what we’ve done so far, we aren’t satisfied. As we execute today and build for tomorrow, our associates and unique omnichannel assets position us for success.”
According to a company press release, Walmart projects fiscal year 2020 to include the following:
- Consolidated net sales growth: At least 3 percent in constant currency, negatively affected by deconsolidation of Walmart Brazil and planned tobacco sales reduction at Sam’s Club
- Comp sales growth: Walmart U.S. +2.5 percent to +3 percent increase
- Walmart U. E-Commerce Net Sales and Growth: Around 35 percent
- Walmart International net sales growth: Around 5 percent in constant currency
- Consolidated Operating Income: Decline by a low-sing digit percentage range
- Grocery Pickup and Delivery: Approximately 3,100 grocery pickup and 1,600 grocery delivery locations by year-end fiscal year 2020
- Capital Expenditures: Approximately $11 billion; strong focus on store remodels, customer initiatives, e-commerce, technology, and supply chain
- New Units: Walmart U.S. expects to open fewer than 10 stores; Walmart International expects to open slightly more than 300 new stores primarily in Walmex and China
How will Walmart’s forecast affect its position in the grocery retail race as we finish out 2018? AndNowUKnow will continue to report on the latest.