Reporting from Bentonville: Key Insights from Walmart Day Three

Date : 08 June 2013

The final day of IGD’s trip to Bentonville included the Annual General Meeting, the focal point of its shareholders week, with a high energy early morning meeting of 14,000 Walmart associates and shareholders. Senior execs then also gave a Q&A with analysts.

Shareholders' Meeting

As always, the event included some big name acts including host Hugh Jackman and performances from John Legend, Kelly Clarkson and Jennifer Hudson. Tom Cruise also made a surprise appearance and gave a speech highlighting Walmart’s work in areas such as sustainability.

The meeting also enabled leaders of the business to provide some key messages and highlights:

  • Charles Holley, EVP and CFO stressed Walmart’s consistently strong financial performance, with the company creating $30bn of value in the last year, and a continued focus on the productivity loop, with expenses growing at a slower rate than sales for three years now. Charles also announced the Walmart Board had approved a new $15bn share repurchase programme, as part of its focus on returning value to shareholders
  • Doug McMillon, President and CEO Walmart International, highlighted Walmart’s strong business outside the US, which generated $135bn in revenue in fiscal 2013 and $6.7bn operating income; equating to roughly 30% of Walmart’s sales
  • Bill Simon, President and CEO, Walmart U.S. talked about job creation in the business, with 500 promotion opportunities created daily, with 2013 “an awesome year” with operating income up 5.4%.
  • Mike Duke, President and CEO of Walmart stated that its investment in eCommerce “is really paying off”, with global sales growing 30% in Q1 and expected to reach $10bn this year

Asda also featured prominently in the meeting, with frequent references to its multichannel business and the Asda Price Guarantee (APG), both of which are considered best-in-class across the Walmart business. In addition, Retail Director Mark Ibbotson received the prestigious Sam Walton Entrepreneur Award for his work on multichannel and driving efficiencies in the Asda business.

Q&A Session with the Executive Team

Following the Shareholders' meeting, members of the Executive took questions from analysts, with key points including:

  • Charles Holley stated that Walmart was committed to leverage scale benefits: “there is still a lot of cost and efficiency we can get in our business”
  • Mike Duke repeated how important people were to the Walmart business: “We have the strongest leadership team...and the best merchant talent that we have ever had”
  • Neil Ashe, President and CEO, Global eCommerce restated Walmart’s aim to create a “uniquely Walmart solution” in ecommerce, and that it would continue to invest in the channel “as long as it keeps growing. He also highlighted additional opportunities to develop solutions in Sam’s Club which will enable it to differentiate from its competitors

Walmart

Source: Walmart

In summary

IGD’s key takeways from this week’s presentations and sessions are as follows:

  • A clear and consistent message throughout, with the Productivity Loop, Walmart’s common purpose and values repeated and referred to frequently. Given the scale and complexity of the business, this remains a key strength, especially when trading worldwide in competitive and often challenging markets
  • The international business continues to grow strongly, not only in terms of sales and profit, but also the way it is leveraging scale.  Learnings and best practice are being shared across markets, with common platforms and systems increasingly being rolled out in an effort to reduce costs. A notable example is the greater role of sourcing from International Procurement and Logistics (IPL), for example supplying beef into Japan
  • It’s also been notable how much Asda has been referred to this week as a hub of best practice, whether that is its online and multichannel business, the Asda Price Guarantee or its focus on efficiency. Another example is the way Asda built customer panels into the new product development process, which has now been adapted within Sam’s Club, as part of its Sensory Lab initiative
  • Finally, Walmart’s commitment to an online and multi-channel future has also been a common theme. As there is no blueprint for success in this fast growing channel, it’s vital to have a “test and learn” mentality. Walmart is clearly seeking to combine its scale and significant store network with an entrepreneurial, innovative and flexible approach through its Global eCommerce team and Walmart Labs 

For more from the Shareholders' meeting

Read our updates from day one and day two of the Walmart Shareholders' meeting.