Wal-Mart’s annual shareholders’ meeting on Friday was the usual self-congratulatory, business-lite affair, where entertainers, highlight videos of store associates and customer testimonials, and the legacy of Sam Walton at times seemed to overshadow the retail giant’s challenges.
“We’re making progress, but there’s still a lot of work to do,” said Doug McMillon, president and ceo of Wal-Mart Stores Inc. “We’re still pushing the ball up the hill a bit.”
Reading from an “electronic book” on the multimedia stage at the Bud Walton Arena at the University of Arkansas in Fayetteville, McMillon recited Chapter One: The company’s humble beginnings under founder Sam Walton.
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Fast-forward to today, McMillon said, “We’re writing Chapter Four and the headline is about technology, the Internet, mobile devices and the use of data. E-commerce is growing, smartphones are prevalent and self-driving cars and virtual reality are starting to appear.”
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No word on the inventory-checking drones the retailer demonstrated at a media event Thursday ahead of the shareholders’ meeting.
McMillon said Wal-Mart’s apps and web sites with expanded assortments are easier to use.
“Scan and Go allows you to skip the checkout line,” said Neil Ashe, president and ceo of global e-commerce. “The Wal-Mart app allows you to refill a prescription by scanning the number. Wal-Mart Pay works with any smartphone or payment method. We’ve been testing it and this month we’re rolling it out across the entire U.S.”
Wal-Mart is clearly trying to beat Amazon at its own game. The retailer recently unveiled a new two-day unlimited shipping option for $49 that’s less expensive than Amazon Prime’s $99 a year.
“We’re testing deliveries to customers with Uber and Lyft,” McMillon said. “We’re moving fast. If we can imagine it, we can do it. We get to reimagine retail again.”
Ashe said Wal-Mart is charging customers a $5 to $7 fee for home delivery of groceries ordered online and delivered via a ride-sharing service. “Customers won’t see the delivery provider,” Ashe said. “It’s Wal-Mart-branded. We’re trying to satisfy those things she needs on a regular basis, and trying to do it better than anyone else.
“On-demand delivery will show up when you want it to show up,” he added. “It’s a game-changer and a whole other service level.”
Wal-Mart is working to get products closer to consumers in various ways. On Thursday, the retailer opened a hybrid center in Japan that’s half-store and half-e-commerce fulfillment center.
“Expanding and improving pick-up and delivery options throughout the world have been a key initiative for Wal-Mart and Sam’s Club,” McMillon said.
British actor James Corden hosted the meeting with aplomb and corny jokes. Welcoming the Chinese contingent in the audience he said, “It’s the 20th anniversary of Wal-Mart in China, or as I call it, The Great Wall-Mart of China.”
“There are 11,520 Wal-Mart stores in 28 countries,” Corden said. “Beyoncé’s current world tour is only going to 16 countries. Congratulations Wal-Mart, you’re bigger than Beyoncé.” Citing Wal-Mart Mexico’s 25th anniversary, the actor said, “Given how this presidential election’s going, we mostly want to know if there’s a Wal-Mart in Canada.”
When Corden introduced Brett Biggs, executive vice president and chief financial officer, he gave him an overly long bear hug, which became a running joke throughout the morning.
Biggs turned more serious, noting that Wal-Mart, which logged total revenue of $482 billion this year, plans to grow sales by $45 billion to $60 billion in three years.
“Our [$2.7 billion over two years] investment in associate wages, technology and store standards is producing results,” Biggs said. “Wal-Mart U.S. had seven straight quarters of positive comp-store sales and six quarters of positive comp traffic. The majority of international markets delivered positive comps for eight consecutive quarters, led by Walmex and Wal-Mart Canada.”
Globally, on a constant currency basis, e-commerce sales and GMV grew 7 percent and 7.5 percent, respectively, in the recent first quarter. “Growth here is too slow,” McMillon said on a conference call with analysts last month. “The U.S. number is better than the global number, but neither is as high as we’d like.”
Net sales for the international division declined 7.2 percent in the quarter.
“We’re pleased with the digital strategy and how membership continues to grow at Sam’s Club,” McMillon said on Friday. Biggs, during the first quarter call with analysts, said, “We know we can deliver stronger results. Leading in digital is a focus for Sam’s.”
David Cheesewright, president and ceo of the international division, said at the annual meeting, “China posted a positive comp in the first quarter. The business in China is Wal-Mart stores and Sam’s Club, which is very well-suited to China. We’re getting more stores on the ground for Sam’s Club and we also want to put Sam’s on Yihaodian,” the Chinese e-commerce site Wal-Mart acquired full ownership of last year.
Wal-Mart hasn’t been lowering prices in stores since it made the $2.7 billion commitment to wages. “Is Wal-Mart’s price perception high?” McMillon asked rhetorically. “You don’t reduce the prices until you clean the place up. We’ve made some good progress on that. Through the blend of margins, you can roll prices down. We can methodically start working to where the productivity loop starts to spin. I’m sure some competitors will react.
“A well-run SuperCenter with a good mix of rollbacks, even in a world of e-commerce — they [SuperCenters] create a runway and a cash flow and opportunity we don’t want to miss,” McMillon said.
Greg Penner, who was elected chairman of the board last year when his father-in-law Rob Walton retired, said, “We’re going to be smaller and nimbler. We have a lot of depth in technology and we have a lot of depth on the board.”
At the meeting, all 12 nominees up for re-election were elected and the three company-sponsored proposals were approved. Three proposals introduced by shareholder failed.
Following the shareholders’ meeting, at a Q&A for Wall Street analysts with Wal-Mart executives, McMillon was asked whether the retailer would consider divesting any underperforming properties. “We’re willing to prune the portfolio,” he said. “I don’t think we should exit a market unless we understand how it’s going to impact everything. We’re willing to make tough decisions where we need to, to win where we must win.”
McMillon also noted that Wal-Mart “hasn’t entered a new market for some time. We’re open to doing things differently.”
Biggs admitted at the Q&A session, “I don’t think we’ve done as well as we could on expenses. It’s going to be a big focus for us.”
An hour earlier at the shareholders’ meeting, Biggs addressed the 14,000 associates in the auditorium, asking, “Can everyone here in this room do something to help us grow sales? We’ve always been focused on the bottom line. We have to cut back on things we just don’t need. Can you help us manage our expenses?
“I like to win,” he said. “Do you like to win?”