Walmart shows strength in all sectors
Condemned and accused by many, the world's largest retailer and grocery player, Walmart Inc., presents first quarter results in 2025 with strong revenue and operating income growth – in the USA and internationally.
[i] Many have called Walmart and larger retailers such as Carrefour, Costco, Schwartz Group and Kroger (to name a few) dinosaurs that will hardly survive in a digital world[ii]. The negative predictions have so far not come true.
Rather, the case is that big gets bigger (there are exceptions), faster and better - both in-store and in distribution. We see it all over the world and value development in Walmart has rarely, if ever, been better.
Multichannel players
More concretely, the critics imagined that online shopping would become the new, massive thing already three decades ago. The consulting company Andersen Consulting, now Accenture PLC, set up so-called "future stores" in both London and Chicago in the 90s, where they showed future home deliveries of groceries.[iii] Andersen's predictions failed profoundly.
Online shopping for groceries still accounts for a small proportion of the turnover of groceries; an estimated 4 percent in Sweden and 11 percent in Great Britain. The point is that most people still prefer physical stores when they shop and the established players are in the best locations, they have the size, negotiating power to push prices from suppliers and, not least, marketing power.
This writer believe physical stores will have a strong position in the near future. There is also reason to believe that it is the players who are in many channels, who have both physical stores and online shopping, will take market shares.
As the Norwegian Oda shows, it is exceedingly difficult to set up a "stand alone" online grocery store. It is of course possible, but you burn a lot of cash along the way and it takes a long time before you break even, if ever.
Walmart CEO is positive about the future
Looking ahead, the Company issues guidance for the second quarter and expects net sales to increase 3.5% to 4.5% and operating income to grow 3.0% to 4.5%, in constant currency.
The Company now expects to be at the high end or slightly above its earlier guidance for net sales growth of 3.0% to 4.0% and operating income growth of 4.0% to 6.0% for the fiscal year 2025.
“Our team delivered a great quarter. Around the world our goal is simple - we are focused on saving our customers both money and time. It is inspiring to see how our associates are simultaneously executing the fundamentals and innovating to make shopping with us more enjoyable and convenient. We are people-led and tech-powered, and that combination is propelling our business,” declares president and CEO Doug McMillion in a press release on 16 May.
First Quarter Highlights
- Consolidated revenue of $161.5 billion, up 6.0%.
- Consolidated gross margin rate up 4,2 % due to improvements across segments, led by Walmart U.S.
- Consolidated operating income up $0.6 billion, or 9.6% due to higher gross margins and growth in membership income.
- Global eCommerce sales grew 21%.
- Approximate 18 percent of total turnover is generated outside USA.
“Our strong results this quarter demonstrate the power of our global omni-retail capabilities and the team’s ability to execute with discipline. As we continue to reshape our business model, we are focused on strategically investing in areas that reinforce our purpose and growth strategy, argues John David Rainey,” CFO & EVP.
A quick overview
Walmart runs over 4,600 stores in the United States (5,200 including Sam’s Club) and over 10,000 stores globally.
- Walmart generated $ 641 billion in sales in 2023
- The retailer serves around 240 million customers globally each week.
- Main Office Bentonville, USA
- Number of employees 2,100,000
- Market value approximately 521M USD
Sources: Walmart Inc., NHH, Nordnet, Economist, FT.
[i] Walmart, like many large corporations, operates on a fiscal year calendar that is different from the calendar year. A fiscal year is a one-year period that companies use for accounting purposes and preparing financial statements. Walmart’s fiscal year runs from February 1 to January 31, which means that fiscal year 2025 for Walmart began on February 1, 2024.
[ii] Jeff Bezos, Amazon is among the more prominent doom sayers. In Norway Karl Munthe-Kaas, earlier CEO in Oda, has argued that ordinary stores have a bleak future. So far, his shareholders in Oda have lost millions and millions on that prediction. In 2022, alone, Oda Holding lost 1,14 billion NOK.