Wal-Mart’s Investors Aren’t Impressed With The Company’s Gameplan

Wal-Mart’s Investors Aren’t Impressed With The Company’s Gameplan

Walmart’s (NYSE: WMT) stock was trading lower by around 3 percent on Thursday which coincided with the company’s annual Investment Community Meeting.

At the meeting, Wal-Mart reiterated its full year 2017 earnings per share guidance to be in a range of $4.15 to $4.35 and to be relatively flat in fiscal 2018.  The year after is expected to deliver an earnings per share growth of around five percent.  

Aside from financial metrics, the company outlined its game plan moving forward.

Walmart’s President and CEO Doug McMillon said that management’s top focus lies with these four objectives: 1) make the shopping experience easier for families, 2) manage the company with discipline and a keen eye on expenses, 3) prove to clients it is the most trusted retailer, and 4) position the company to be a winner.

“We are encouraged by the progress we’re seeing across our business and we’re moving with speed to position the company to win the future of retail. Our customers want us to run great stores, provide a great e-commerce experience and find ways to save them money and time seamlessly – so that’s what we’re doing,” McMillon said.

Walmart’s Chief Financial Officer Brett Biggs pledged to investors that his main focus will be on creating a financial framework that will result in strong and efficient growth.  Capital will be allocated strategically in order to achieve long-term shareholder value.

In order to drive revenue growth, Biggs will focus more on comp sales and e-commerce growth while simultaneously slowing down its store openings.  Existing stores will undergo investments in remodeling and other customer initiatives.

Select Guidance, China Update

Walmart also guided the following:

  1. Complete the approximately $8 billion worth of stock buybacks remaining in a $20 billion authorization by the end of fiscal 2018.
  2. Capital expenditure will be around $11.0 billion in fiscal 2018 and will be used to accelerate the pace of store remodels and invest in online and digital initiatives.
  3. Generate approximately $80 billion in operating cash flow through fiscal 2019.

Finally, Wal-Mart disclosed that it increased its stake in a leading China-based online retailer, JD.com (NASDAQ: JD), from five percent to more than 9 percent.

Walmart bough its first stake in JD.com back in June.  JD.com is considered to be China’s second largest e-commerce seller after Alibaba (NYSE: BABA).