Walmart: Momentum, Investments Will Drive Results

As part of its 2016 investment community meeting, Wal-Mart Stores said it plans to outline the company’s strategic framework to its omnichannel strategy, which includes continued investment in digital products and integration of Jet.com into more comprehensive Internet operations.

According to Walmart, the company’s president and CEO Doug McMillon will outline four key areas of focus at the meeting that should drive results: make every day easier for busy families; operate with discipline, including a continued focus on expense management; be the most trusted retailer; deliver results, and position the company to win.

As part of his meeting comments, McMillon will emphasize ongoing Walmart success driven by factors including continued positive business momentum in the United States, solid growth in key international markets, including Mexico and Canada, a sharpened focus in China, and e-commerce investments.

“We are encouraged by the progress we’re seeing across our business, and we’re moving with speed to position the company to win the future of retail. Our customers want us to run great stores, provide a great e-commerce experience and find ways to save them money and time seamlessly, so that’s what we’re doing,” McMillon said.

Walmart CFO Brett Biggs will outline the company’s financial framework based on delivering strong, efficient growth, operating with discipline and allocating capital strategically to drive long-term shareholder value. The company will rely more on comp sales and e-commerce growth to drive the top line and plans to slow new store openings, while increasing investments in e-commerce, technology, store remodels and other customer initiatives.

For its next fiscal year, Walmart stated that it expects GAAP earnings per share to be relatively flat from this fiscal year’s adjusted EPS. It anticipates continued momentum in its store business and accelerated e-commerce growth based on incremental U.S. e-commerce operating investments, including those in Jet.com.

Over the next fiscal year, Walmart projects that its capital investments will include $6.1 billion on the Walmart U.S. division versus $6.4 billion in the current period. Capital investment in the international division will grow by $200 million next year versus this year to $3 billion, while capital investment in Sam’s Club will gain $100 million to $700 million year over year. Corporate and support spending will remain flat at $1.2 billion.

The company plans to add 35 supercenters and 20 small format stores in the U.S. versus 60 and 70, respectively, in this fiscal year, while adding four Sam’s Clubs versus 11 in the present year. In the international segment, Walmart anticipates adding 190 to 220 stores next year versus 190 to 210 in the current period.

Biggs added, “We have the financial strength to strategically invest in growth, while returning significant cash to shareholders in the form of dividends and share repurchases.”