Walmart Inc. (NYSE: WMT) is kicking off its two-day 2023 Investment Community meeting, where leadership will highlight how the company is investing to strengthen its business through its people and an unparalleled, next generation supply chain network of stores, clubs and fulfillment centers, and driving future global growth opportunities across its omnichannel ecosystem and high value initiatives. The company is also reiterating its first quarter and full-year guidance for fiscal year 2024.
“We are in a unique position to serve our customers and members however they want to shop, which will fuel continued growth,” said Doug McMillon, Walmart president and chief executive officer. “As we grow, we will improve our operating margin through productivity advancements and our category and business mix, and drive returns through operating margin expansion and capital prioritization.”
A People-Led, Tech-Powered Omnichannel Retailer
As part of the meeting, the company is highlighting its purpose, unique culture and the importance of its associates and unveiling its plan for a new more connected and automated supply chain which will improve the experience for its customers and associates and simultaneously increase productivity.
Through its extensive work, Walmart is reengineering its supply chain to fulfill customer needs with a more intelligent and connected omnichannel network that is enabled by greater use of data, more intelligent software and automation. The outcome improves in-stock, inventory accuracy and flow whether customers shop in stores, pickup, or have a delivery.
Walmart showcased its supply chain innovation Tuesday at its Brooksville, Fla., regional distribution center, as one piece of how the company is building a scaled system of supply chain capabilities that uses a combination of data, software and robotics. Through automation and state-of-the-art technology, the company illustrated how the increased item storage allows the distribution center to provide a more consistent, predictable and higher quality delivery service to stores and customers and react more quickly to customer demand.
Stores operate as a place to shop and as fulfillment centers and delivery stations. Distribution and fulfillment centers hold a mix of items, from suppliers and sellers. This allows Walmart to use its existing assets more flexibly and efficiently for new ways of working.
By the end of Fiscal Year 2026, Walmart believes roughly 65% of stores will be serviced by automation, approximately 55% of the fulfillment center volume will move through automated facilities, and unit cost averages could improve by approximately 20%.
As the changes are implemented across the business, one of the outcomes is roles that require less physical labor but have a higher rate of pay. Over time, the company anticipates increased throughput per person, due to the automation while maintaining or even increasing its number of associates as new roles are created.
“It all starts with our associates,” McMillon said. “We are a people-led, tech-powered omnichannel retailer. As it relates to being people-led, it’s about purpose, values, culture, opportunity and belonging. We serve our associates by creating opportunities. Opportunities that turn jobs into careers. We help bring dignity to work by enabling them to see how they’re serving others, as part of a team, and helping them achieve their potential. And as we serve them, they serve our customers and members well…they make the difference.”
Financial Framework
Walmart will outline how the company expects its growth investments to transform its financial profile, centering on three key building blocks: sales growth from its omni-channel business model; diversifying earnings streams through improved category and business mix; and scaling proven, high-return investments that drive operating leverage and improve incremental operating margins.
“We believe that we have the building blocks in place to help define the next chapter of retail and do so while driving strong growth and shareholder returns,” said John David Rainey, Walmart executive vice president and chief financial officer. “Looking at where we are today, we believe that approximately 4% sales growth, and growing operating income at a faster rate, are still the appropriate targets for our business over the next 3-5 years. The investments we’ve made have positioned us well and stand to generate steady and sustained growth at higher margins. Achieving our targeted 4% sales growth over the next five years would add more than $130 billion of sales on top of our roughly $600 billion base today. On top of that, we think the opportunity for operating income growth over the next 3-5 years could be better than what we’ve outlined.”
Walmart’s multi-year growth outlook assumes all three business segments contribute to its mid-single-digit sales growth target. The company is strengthening its global omni-channel ecosystem and scaling higher-margin value streams that serve customers and businesses and are natural connectors to its omnichannel retail business. This includes advertising, data, memberships and marketplace, all initiatives that will help deliver a better customer and member experience while driving stronger returns.
Fiscal 2024 Q1 and Full-Year Guidance
The company reiterates its FY 2024 Q1 and full year guidance:
Fiscal 2024 Q1 Guidance:
| Metric | FY24 Q1 Guidance |
| Consolidated net sales | Increase 4.5% to 5.0% constant currency |
| Consolidated operating income | Increase 3.5% to 4.0% constant currency, negatively impacted by 235 bps from LIFO |
| Adjusted earnings per share | $1.25 to $1.30, including an expected $0.03 impact from LIFO |
Fiscal 2024 Full-Year Guidance:
| Metric | FY24 Guidance |
| Consolidated net sales | Increase 2.5% to 3.0% constant currency |
| Walmart U.S. comp sales | Increase 2.0% to 2.5%, ex. Fuel |
| Sam’s Club U.S. comp sales | Increase about 5.0%, ex. Fuel |
| Walmart international net sales | Increase about 6.0% constant currency |
| Consolidated operating expenses | Increase slightly as a percentage of net sales constant currency |
| Consolidated operating income | Increase approximately 3.0% constant currency, negatively impacted by 100 bps from LIFO |
| Interest expense, net | Increase about $750 million, or a $0.20 headwind to EPS vs. last year |
| Effective tax rate | Range of 25.5% to 26.5%, or an $0.10 headwind to EPS vs. last year. The rate is expected to be more normalized vs. FY23, which benefited from discrete items |
| Noncontrolling interest | A $0.12 headwind to EPS vs. last year due to acquiring the remaining shares of Massmart, the purchase of Alert Innovation, and an expected stronger contribution from Walmex |
| Adjusted earnings per share | $5.90 to $6.05, including an expected $0.14 impact from LIFO |
| Capital expenditures | Flat to up slightly in total dollars versus last year with a focus on technology, supply chain, and customer facing initiatives |
