Walmart Inc. (WMT) recently concluded its two-day investment community meeting on Wednesday, in Tampa, Florida. Chief Financial Officer John Rainey spoke on the giant retailer’s path where the operating-income growth is expected to be higher than revenue growth. Investors were pleased with the bullish message and the company’s shares saw a 1.4 percent gain, after the presentation.
Walmart detailed its strategies of increasing its operating income growth, some of which are selling a large number of categories with higher-margin general merchandise and increasing its investment in supply chain and technology.
Walmart believes that these factors will lead to a reduction in costs as well as growth in its e-commerce base. The big box retailer’s goal is to retain as well as increase its e-commerce customer base.
Walmart is focusing on how to use its existing assets. An availability of thousands of stores located within 10 miles of 90 percent of American households is a big advantage. Walmart does not need to build new fulfillment centers for e-commerce. It can set aside floor space in existing stores.
Walmart has seen success as its stores are becoming multi-functional as they operate as a place to shop, as a fulfillment center and as a delivery station. This gives the company flexibility in its use of assets. It also offers a new way of working with multiple objectives of store and e-commerce at the same location.
Walmart also outlined how its financial profile would be transformed as a result of the investments made by the company for its growth. The company mentioned three building blocks including the increase in sales from its omni-channel business model, earning streams getting diversified as it improved its business and category mix and scaling high-return investments that have proven to drive operating leverage as well as improve operating margins.
Walmart is looking at a future that is driven by technology. It has invested heavily in e-commerce and needs to see its return on invested capital to reach its earlier numbers, before it ventures into e-commerce.
The company also provided its Fiscal 2024 Q1 and Full-Year Guidance.
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Walmart to Automate 65 percent of stores by 2026
