Walmart Hits Accelerator on E-Commerce
On October 15, 2014, Wal-Mart Stores, Inc. presented its capital expenditure plans for the next fiscal year ending Jan. 31, 2016 at its 21st annual meeting for the investment community. Total capital spending for fiscal year 2016 is projected to range between $11.6 and $12.9 billion, including approximately $1.2 to $1.5 billion for e-commerce and digital initiatives.
“This is an exciting time for Walmart, as there are so many new ways to serve customers. Exceeding customer expectations has always been our goal, and we have short-and long-term opportunities to do that even better,” said Wal-Mart Stores, Inc. President and CEO Doug McMillon. “We’ll change the mix of our capital spend next year to provide greater access, while continuing to focus on price leadership, service, and a broad assortment. We’ll give customers the choices they want and need in ways that only Walmart can.”
The company also indicated that as a result of a tougher sales environment than it anticipated a year ago, it now expects to grow net sales for the current fiscal year between 2 and 3 percent on last year’s $473.1 billion. The company indicated in February that it expected net sales growth to be at the low end of its guidance provided last October of 3 to 5 percent.
Charles Holley, Walmart’s executive vice president and chief financial officer, outlined the company’s financial priorities for growth and detailed the investment and expansion plans for fiscal year 2016.
“Our business and customers continue to evolve and so will the way we deploy capital. We will invest more heavily in e-commerce initiatives, while temporarily moderating our global physical growth, particularly larger stores,” Holley explained. “We are focused on creating an endless aisle and appealing to our customers’ changing needs.”
Holley also discussed the financial performance of the company’s e-commerce business and provided more insight into certain financial metrics.
“Globally, we expect to finish this year with approximately $12.5 billion in e-commerce sales,” said Holley. “Looking forward we expect an increase in global e-commerce sales of around 25 percent in fiscal year 2016, and we anticipate growth over the three-year period from fiscal years 2016 through 2018 to average 30 to 40 percent."
“The greatest investment of capital and in operating loss for our e-commerce operations will come over the next 18 to 24 months, and then we would expect to see that investment start to moderate in fiscal 2018,” Holley added.
The company expects net sales to increase by 2 percent to 4 percent next year.
“This translates into approximately $10 to $20 billion of net sales growth,” Holley said. “Operating expenses will grow at a rate somewhat faster than sales growth and operating income will be flat to slightly down, given our investments in technology, e-commerce and digital.”
Walmart Global eCommerce President and CEO Neil Ashe outlined the progress made during the past year on the company’s e-commerce strategy.
“We are delivering best in class e-commerce capabilities that we are combining with the assets of the world’s largest retailer to engage with customers in new ways. We have delivered the core components of our new global technology platform. We are expanding our next generation fulfillment network to reach our customers fast and efficiently, and we’re building new data capabilities to enhance our customer experience,” said Ashe.
Ashe announced that next year Walmart will build new online fulfillment centers in Georgia and Pennsylvania, each over 1 million square feet. These centers will be part of its next generation fulfillment network that includes dedicated online fulfillment centers, shared distribution centers, and ship-from-store locations that are all tied together by one of the biggest and most efficient transportation networks in the country. Walmart will also add new fulfillment centers in Brazil and China.
The company plans to spend capital of approximately $1.0 billion for e-commerce and digital initiatives this fiscal year and between $1.2 and $1.5 billion next year.
“This is an exciting time for Walmart, as there are so many new ways to serve customers. Exceeding customer expectations has always been our goal, and we have short-and long-term opportunities to do that even better,” said Wal-Mart Stores, Inc. President and CEO Doug McMillon. “We’ll change the mix of our capital spend next year to provide greater access, while continuing to focus on price leadership, service, and a broad assortment. We’ll give customers the choices they want and need in ways that only Walmart can.”
The company also indicated that as a result of a tougher sales environment than it anticipated a year ago, it now expects to grow net sales for the current fiscal year between 2 and 3 percent on last year’s $473.1 billion. The company indicated in February that it expected net sales growth to be at the low end of its guidance provided last October of 3 to 5 percent.
Charles Holley, Walmart’s executive vice president and chief financial officer, outlined the company’s financial priorities for growth and detailed the investment and expansion plans for fiscal year 2016.
“Our business and customers continue to evolve and so will the way we deploy capital. We will invest more heavily in e-commerce initiatives, while temporarily moderating our global physical growth, particularly larger stores,” Holley explained. “We are focused on creating an endless aisle and appealing to our customers’ changing needs.”
Holley also discussed the financial performance of the company’s e-commerce business and provided more insight into certain financial metrics.
“Globally, we expect to finish this year with approximately $12.5 billion in e-commerce sales,” said Holley. “Looking forward we expect an increase in global e-commerce sales of around 25 percent in fiscal year 2016, and we anticipate growth over the three-year period from fiscal years 2016 through 2018 to average 30 to 40 percent."
“The greatest investment of capital and in operating loss for our e-commerce operations will come over the next 18 to 24 months, and then we would expect to see that investment start to moderate in fiscal 2018,” Holley added.
The company expects net sales to increase by 2 percent to 4 percent next year.
“This translates into approximately $10 to $20 billion of net sales growth,” Holley said. “Operating expenses will grow at a rate somewhat faster than sales growth and operating income will be flat to slightly down, given our investments in technology, e-commerce and digital.”
Walmart Global eCommerce President and CEO Neil Ashe outlined the progress made during the past year on the company’s e-commerce strategy.
“We are delivering best in class e-commerce capabilities that we are combining with the assets of the world’s largest retailer to engage with customers in new ways. We have delivered the core components of our new global technology platform. We are expanding our next generation fulfillment network to reach our customers fast and efficiently, and we’re building new data capabilities to enhance our customer experience,” said Ashe.
Ashe announced that next year Walmart will build new online fulfillment centers in Georgia and Pennsylvania, each over 1 million square feet. These centers will be part of its next generation fulfillment network that includes dedicated online fulfillment centers, shared distribution centers, and ship-from-store locations that are all tied together by one of the biggest and most efficient transportation networks in the country. Walmart will also add new fulfillment centers in Brazil and China.
The company plans to spend capital of approximately $1.0 billion for e-commerce and digital initiatives this fiscal year and between $1.2 and $1.5 billion next year.