Walmart Annual Shareholder Letter: Retail Passengers, Find your Barf Bags
Walmart reiterated a few important things in their annual shareholder letter, so I thought I would try and unpack "what they said" versus "what they mean" (Watson-style) in the shareholder letter.
1 - What they said:
Walmart announced that by the end of 2025, 95% of Americans can get 3-hour Walmart delivery.
What they mean: If you want 3 hour delivery, you are going to have a pay a premium for it. And that is high margin business for us. How many SKUs this is for is not revealed, which is the part that ultimately matters. Still, this is a great milestone for them and shows their supply chain automation and transformation in the last few years.
2 - What they said:
"Walmart says it is building a new business model."
What they mean:
Our new business model happens to be Amazon's old business model. Marketplace, fulfillment services and ads seemed like such good ideas, we didn't even need ChatGPT to copy and paste the business model.
Also what they mean:
Retail is difficult and low margin. What's better than someone else taking the inventory risk (Marketplace) and then pay us high-margin ad revenue (Walmart Connect ads)?
3 - What they said:
"We are navigating turbulence.... and have done it other times like the pandemic, 2008 recession, post-9/11, etc. We know how to navigate turbulence."
What they mean:
The fact that these are the comparable event examples means shit is starting to getting bad, and things are likely to get worse.
Also what they mean:
"Uh, folks, this is your Walmart captain speaking on behalf of "Retail Airline". If you have not yet located your barf bags, now is not a bad time to pull those out. As a reminder, the brace for impact position is to stick your head between your legs."
Seriously though of the retailers Walmart is in a good position. The CEO said they wouldn’t trade their position for others and I would agree with them.
