Walmart's 3rd quarter earnings call is crazy.
100% positive. Not a single negative sentence in an hour.
Labor shortage?
WMT hired 200,000 new workers the last 3 months—2,200 people a day, 150,000 of them in stores.
Supply chain jam? WMT's inventory up 11.5%—stocked for Xmas.
100% positive. Not a single negative sentence in an hour.
Labor shortage?
WMT hired 200,000 new workers the last 3 months—2,200 people a day, 150,000 of them in stores.
Supply chain jam? WMT's inventory up 11.5%—stocked for Xmas.
2/ The financials are exuberant, too. Will get to those in a bit (US same store sales +9.2%).
But COVID? Mentioned once, in passing. In an hour.
Inflation? Barely mentioned—except as bringing customers to WMT.
The phrase of the hour was 'strong consumer'—used a dozen times.
But COVID? Mentioned once, in passing. In an hour.
Inflation? Barely mentioned—except as bringing customers to WMT.
The phrase of the hour was 'strong consumer'—used a dozen times.
3/ If you just assessed the US economy based on Walmart's performance in the last 92 days, and based on what their senior executives just said in an hour talking to investment analysts — the US economy is strong, even joyful.
'Customers are celebrating,' said one WMT executive.
'Customers are celebrating,' said one WMT executive.
4/ 'We're seeing more pressure on wholesale prices than on retail.'
That is: Walmart's costs are going up, but it is aggressively *not* passing those costs along.
Indeed, Walmart's profit margin is down — they buy gasoline, too, for instance.
That is: Walmart's costs are going up, but it is aggressively *not* passing those costs along.
Indeed, Walmart's profit margin is down — they buy gasoline, too, for instance.
5/ WMT CEO Doug McMillon: 'Fighting inflation is in our DNA. Sam Walton loved that fight.'
This is the kind of moment Walmart lives for.
They invented modern logistics.
They invented modern price and cost management.
It shows right now.
This is the kind of moment Walmart lives for.
They invented modern logistics.
They invented modern price and cost management.
It shows right now.
6/ To customers: 'Expect to find the products you want on our shelves at a great price.'
WMT expects same-store sales to grow 5% in the Xmas season. They expect profit for the year to be +17%.
Among things that help: No markdowns from Halloween or back to school. 'Sell-thru.'…
WMT expects same-store sales to grow 5% in the Xmas season. They expect profit for the year to be +17%.
Among things that help: No markdowns from Halloween or back to school. 'Sell-thru.'…
7/ Halloween costumes and candy, back-to-school supplies and clothing simply sold out — they didn't have to keep it in-stock after the season, marked down.
One more thing:
Walmart is already pressuring suppliers for what it calls 'roll backs': Price *reductions.*
One more thing:
Walmart is already pressuring suppliers for what it calls 'roll backs': Price *reductions.*
8/ 'We have lots of suppliers. We're talking to them about who wants to be really aggressive — who wants to lower their prices while everyone else is raising theirs—to win market share.'
Who's doing that?
Walmart. Of course.
Classic 1990s hard-charging WMT. In the digital age.
Who's doing that?
Walmart. Of course.
Classic 1990s hard-charging WMT. In the digital age.
9/ Have whatever complicated constellation of feelings you want about Walmart. They are all well-earned by the company.
It's a consumer & consumption carnival that is also one of the most powerful forces for environmental change & climate-change management in the world.
But…
It's a consumer & consumption carnival that is also one of the most powerful forces for environmental change & climate-change management in the world.
But…
10/ Half the adults in America walk into a Walmart every week.
Half.
And many of those shoppers are the core of America — ordinary folks, with hourly wage jobs, thinking about their work, their kids, the holidays, school, time off.
WMT says that base is strong & secure.
Half.
And many of those shoppers are the core of America — ordinary folks, with hourly wage jobs, thinking about their work, their kids, the holidays, school, time off.
WMT says that base is strong & secure.
11/ Walmart is definitely a barometer of economic health.
It is, literally, the opposite of the Dow Jones, the S&P, the Nasdaq.
Walmart's optimism about its business, which is to say, Walmart's optimism about its customers, is good news.
It is, literally, the opposite of the Dow Jones, the S&P, the Nasdaq.
Walmart's optimism about its business, which is to say, Walmart's optimism about its customers, is good news.
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