Walmart

Sector: Food, drug and mass retailers Countries of operation: The US and 24 other countries Key product categories: Apparel, footwear, general merchandise and groceries Annual Metrics [caption id="attachment_147094" align="aligncenter" width="700"] Fiscal year ends on January 31 of the same calendar year
*Trailing 12 months ended October 31, 2021
**Walmart US comparable sales excluding fuel[/caption]   Summary Founded in 1962 and headquartered in Bentonville, Arkansas, Walmart is the world’s largest brick-and-mortar retailer. The company is a global mass merchandiser and warehouse club operator. Walmart is pioneering in offering its customers both a large assortment and low prices. The company operates stores in a variety of formats, including cash-and-carry stores, convenience stores, discount stores, drugstores, membership-only warehouse clubs and supercenters. The company operates in four major segments: Sam’s Club, Walmart International and Walmart US. As of April 30, 2022, Walmart operates more than 10,500 stores under 46 banners in 24 countries, with 2.3 million employees (almost 1.6 million in the US alone), catering to 240 million customers worldwide every day. Company Analysis Coresight Research insight: Over the past several years, Walmart has been greatly expanding its omnichannel solutions, aiming to directly compete with Amazon, which has been threatening to supplant Walmart as the largest retailer in all major segments (including clothing and grocery) and has already taken the lead on some categories. In 2021, Walmart began to unveil a long-term plan to bring e-commerce and brick-and-mortar stores together by optimizing the interflow between the two entities. A Walmart-backed fintech unit has bought two fintech startups to create the “One” platform, aiming to strengthen the company’s digital payment and loan platform. The retailer has also begun expanding its use of radio-frequency identification (RFID) to further facilitate inventory flow and to better control supply chains, and has been incorporating third-party vendors into its e-commerce site. For fiscal 2022 (ended on January 31, 2022), the company spent $7.1 billion, or 54% of its total $13 billion in capital expenditures, on supply chains and omnichannel solutions, up from $5.6 billion a year earlier. Walmart defines e-commerce sales as sales initiated digitally, regardless of whether they are fulfilled online or in store. Walmart’s omnichannel focus helped the company better position itself during the pandemic, which saw its comparable growth and digital sales further expand—with US comparable sales up 9.0% year over year and e-commerce sales up 79% in fiscal 2021 (ended January 31, 2021). However, the company remains largely a brick-and-mortar presence, complemented by e-commerce capabilities. E-Commerce contributed about 0.7% and 5.4% to comparable sales to its US segment for fiscal 2022 and 2021, respectively. Of its 157 distribution facilities, Walmart dedicated 31 to e-commerce fulfillment, using 3,500 stores to fulfill online orders.

Tailwinds	Headwinds
Ahead of peers in omnichannel implementation Scale in sourcing and distribution Financial capability to invest in and implement long-term innovations.	Strong competition in both brick and mortar and in e-commerce The need for cost rationalization due to cost inflationary pressures Gross margins under pressure due to increases in costs associated with supply chains

  Strategy To maintain its position as the world’s largest brick-and-mortar retailer, Walmart will focus on the following key areas: 1. Lead on price and provide great customer experience

• Provide a broad assortment of quality merchandise and services at everyday low prices (“EDLP”).
• Price items cheaply every day to build trust and keep customers assured that prices will not change under frequent promotional activity.
• Focus on three strategic merchandise units: grocery products, health and wellness products, and general merchandise including apparel, entertainment, hardline and home/seasonal goods.
• Invest to align e-commerce and brick-and-mortar capabilities.

2. Invest to differentiate in access and make use of its strong distribution network

• Make use of its strong distribution network. Approximately 79% of Walmart US’s purchases of store merchandise were shipped through its 162 distribution facilities in fiscal 2020.
• Invest in e-commerce. In recent years, Walmart has offered next-day delivery in select US regions as well as subscription services, in an attempt to compete with Amazon. In September 2020, the company introduced its subscription service in the US, Walmart+, to directly compete with Amazon’s Prime membership program. Walmart+ members have access to free shipping for eligible items, unlimited delivery from store, fuel discounts, and mobile scan and go services. Management expects that Walmart+ will improve customer retention and increase overall basket size. As of April 2022, Walmart has not disclosed the number of Walmart+ subscriptions.
• Invest in One, a new fintech platform to bring together e-commerce and brick-and-mortar operations.

Revenue Breakdown (FY22)   Company Developments

Date	Development
April 22, 2022	Names John Rainey as CFO
March 15, 2022	Announces that it will recruit 5,000 to its Global Tech team globally this fiscal year, and open new technology hubs in Atlanta and Toronto
March 10, 2022	Expands its healthcare Wellness Hub, introducing support for caregivers—providing benefits including access to a caregiving community and live group coaching circles—and a new vitamin subscription plan
March 7, 2022	Partners with British retailer Space NK to launch prestige beauty collection online and in 250 stores
February 17, 2022	Plans share repurchases of up to $10 billion for fiscal
February 11, 2022	Faces a gender and race discrimination lawsuit brought by the Equal Employment Opportunity Commission
January 18, 2022	Faces probe in China over food-safety issues
January 16, 2022	Announces plans to issue cryptocurrency and non-fungible tokens to enter the metaverse
January 5, 2022	Unveils plans to hire more than 3,000 delivery drivers for an all-electric fleet of delivery vehicles
December 8, 2021	Introduces sustainability-themed finance program for its supply chains
November 23, 2021	Appeals federal ruling over its role in the opioid crisis in Ohio
March 1, 2021	Finalizes its sale of Seiyu, their retail operations in Japan, to investment firm KKR and Japanese e-commerce company Rakuten; Walmart will maintain a 15% ownership stake
February 4, 2021	Acquires the advertising software platform Thunder Industries
January 15, 2021	Announces the retirement of Mark Lore as Executive Vice President and CEO of US E-Commerce
December 2, 2020	Indian payments company PhonePe announces that it has raised $700 million in a funding round led by Walmart, with participation from some other investors
November 20, 2020	Agrees to acquire food delivery app JoyRun
November 9, 2020	Completes its sale of Walmart Argentina to retail group Grupo de Narváez
October 2, 2020	Sells a majority stake in ASDA to the Issa brothers and TDR Capital, which values the UK supermarket chain at £6.8 billion ($8.8 billion)
September 22, 2020	Pilots drone delivery of Covid-19 At-Home Self-Collection Kits
September 22, 2020	Partners with Goldman Sachs to offer marketplace sellers access to capital
September 19, 2020	Offers a statement about potential investment in and commercial agreements with TikTok global
September 1, 2020	Introduces its subscription program, Walmart+
July 20, 2020	Announces a major $3.5 billion investment for growth and customer experience transformation in Walmart Canada
July 8, 2020	Announces a plan to launch new subscription program Walmart+
June 30, 2020	Launches a new checkout experience to eliminate waiting and add more options at the register
June 16, 2020	Partners with Shopify to expand its e-commerce marketplace
December 10, 2019	Announces plans to test-drive autonomous grocery deliveries with robotics company Nuro
November 27, 2019	Adds a store map function to its app to help customers find products amid the holiday season
November 11, 2019	Introduces a new shortcut for online grocery using Apple’s virtual assistant Siri
November 4, 2019	Generates an estimated $1 billion in total savings for consumers through branded money transfer services
October 29, 2019	Extends relationship with Green Dot to form a Fintech accelerator

  Management Team

• Doug McMillon—President and CEO
• John Furner—President and CEO of Walmart US
• Judith McKenna—President and CEO of Walmart International
• Kathryn Mclay—President and CEO of Sam’s Club

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Source: Company reports/S&P Capital IQ/Coresight Research