Executive Briefings

How Important Will E-commerce Be to Walmart's Future?

If any company has a proven formula for success, it's Walmart. The Bentonville, Ark.-based behemoth is the world's largest retailer, with nearly half a trillion dollars in annual sales and 2.2 million employees conducting business in 27 countries. Through its more than 11,000 stores and Sam's Club warehouses, Walmart rakes in more revenue than Costco, Kroger, Amazon, Home Depot, and Target - combined.

Changing times, however, have put the formula into question. True, Walmart recently raised its dividend for the 42nd consecutive year, and overall it returned $7.2bn to shareholders through dividends and share buybacks in the fiscal year that ended on January 31. But the company's sales have been sluggish in recent quarters, slowed further by currency headwinds from the stronger dollar. Same-store sales in the United States have been flat. The company recently lowered its growth forecast for the current fiscal year to 1 percent to 2 percent, and Wall Street has been grumbling.

Meanwhile, Amazon, the quintessential online retailer, reported a 19.5 percent increase in net sales for 2014. Clearly, the future of growth in retail lies in e-commerce.

But if any company isn't content to sit on its hands, it's Walmart.

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Changing times, however, have put the formula into question. True, Walmart recently raised its dividend for the 42nd consecutive year, and overall it returned $7.2bn to shareholders through dividends and share buybacks in the fiscal year that ended on January 31. But the company's sales have been sluggish in recent quarters, slowed further by currency headwinds from the stronger dollar. Same-store sales in the United States have been flat. The company recently lowered its growth forecast for the current fiscal year to 1 percent to 2 percent, and Wall Street has been grumbling.

Meanwhile, Amazon, the quintessential online retailer, reported a 19.5 percent increase in net sales for 2014. Clearly, the future of growth in retail lies in e-commerce.

But if any company isn't content to sit on its hands, it's Walmart.

Read Full Article