Wednesday, October 17, 2018

Walmart chief promises investors change and ‘inventing’

Amid jargon, numbers and a challenge to rethink its image, Walmart told investors how it’ll compete against e-commerce competitors and a rocky retail landscape.

During its annual investor meeting, Walmart delivered a lowered sales growth forecast and operating income decline.

Reuters reported:

Walmart now expects to earn between $4.65 and $4.80 per share for fiscal 2019, down from an earlier forecast of $4.90 to $5.05 per share.

Walmart estimates a 35 percent growth rate for its online business in the fiscal year ending in January 2020, against expectations for 40 percent growth in the current fiscal year. Walmart said the 35 percent growth rate will be off a bigger base. The company’s e-commerce business is also expected to post a slightly greater operating loss next year, Chief Financial Officer Brett Biggs said.

The company’s chief couched the underwhelming news in between the Walmart’s plans for the future, described with corporate speak and promises of innovation.

[RELATED: Take the first step in achieving corporate communications excellence]

Reuters reported:

… “I want to challenge your thinking about Walmart,” Chief Executive Doug McMillon told the company’s annual investor meeting, which was webcast. “There is a change within the company that is related to mindset, culture behavior, and we are inventing again.”

Walmart is expanding its areas of grocery delivery, as well as building its e-commerce profile, to stay competitive with online giants such as Amazon and keep itself from the fates that retailers such as Sears and Toys ‘R’ Us have suffered.

Yahoo Finance reported:

Grocery sales make up 56 percent of Walmart's revenue, and McMillon emphasized Walmart's advantage in the food category, an area that Amazon is trying to crack, particularly following its acquisition last year of organic grocer Whole Foods. He said Walmart can offer fresh food within 10 miles of 90 percent of the U.S. population.

Walmart is doubling down on online grocery delivery and pickup options. By the end of the year, 800 U.S. stores will offer grocery delivery and more than 2,000 will offer a pickup service.

Last week, Walmart announced its acquisition of plus-size brand Eloquii. On Friday, Walmart announced that it purchased Bare Necessities.

Forbes reported:

Walmart has bought the digitally native, plus-size fashion brand Eloquii. Financial terms were not disclosed, but Recode reports the number to be $100 million, citing people familiar with the matter.

Eloquii joins Bonobos and Modcloth as part of Walmart's e-commerce business and several of its executives will report to Bonobos' founder Andy Dunn, now senior vice president of digital consumer brands.

Fortune reported:

“The acquisition of Bare Necessities fits well into our broader acquisition strategy, which includes two different types of companies: category leaders … and digital brands that offer unique products,” Denise Incandela, head of fashion for Walmart U.S. eCommerce, said in a blog post.

… In July, Walmart eCommerce president and CEO Marc Lore, told attendees of Fortune’s Brainstorm Tech conference that bringing new brands into the organization is a major part of the company’s three-pronged growth strategy.

Along with expanding its online and delivery options, Walmart is also trimming the fat with small changes meant to save big dollars.

Business Insider reported:

Brett Biggs, the chain's executive vice president and CFO, outlined how a few minor tweaks could make a major difference during Walmart's Investment Community Meeting on Tuesday.

"We are in the process of a multiyear rollout of replacing all fluorescent fixtures with LEDs in our stores, clubs and parking lots," Biggs told the audience gathered at the chain's Bentonville, Arkansas, headquarters. "Not only is it good for the environment, these changes could reduce our annual energy costs by $200 million over time."

Biggs said that the chain would ultimately replace all the fluorescent lights in its stores, clubs, and parking lots.

Biggs also announced that Walmart was changing to a cheaper floor wax in its stores, which can save the company an estimated $20 million each year.

“During his presentation, Biggs said that the company's ‘progress on costs’ was boosting its ‘ability to win,’ Business Insider reported.

Biggs’ sentiment—along with his wording—has been heard in previous meetings.

Inc reported:

These kinds of "small change leads to big change" features are getting to be part of the annual event for Biggs.

At a 2017 meeting, he explained how Walmart had cut $20 million from its budget by making a "small" change to the plastic bags it uses, and another $7 million by giving customers shorter receipts.

Inc reported:

The lesson for business owners of all sizes is pretty clear. You can increase your bottom line by selling more products, expanding to new markets, and increasing efficiencies.

But you're also likely spending more than you need to on some things you never even think about. That's money that could go to building your business, instead of someone else's.

Though the moves signal that Walmart has a plan to impress investors in the future, jargon-filled paragraphs such as the one below filled Walmart’s press release about its meeting:

“We’re adapting and transforming with speed to better serve our existing customers and reach new ones,” said Walmart President and CEO, Doug McMillon. “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 omni-channel assets position us for success.”

Even the press release’s headline was lengthy and ambiguous: “Walmart underscores its unique assets, strong execution and innovation at its investment community meeting.”

Though investors might not be turned off by the corporate speak, its executives should have different messages in place when communicating to employees the company’s changes and future vision.

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