Walmart unstoppable: sells U$S 611 billion in 2022

Walmart, the multinational retailer, increasingly leads the retail sector. The US company closed the year with revenues in excess of 611.2 billion dollars (around 574 billion euros) after posting growth of more than 6.6%.

In the last quarter, the multinational accelerated and invoiced 164 billion dollars, which represents a growth of 7.3 percent compared to the same period of the previous year.

Why? Because the company is trying to attract higher-income consumers who come to its outlets seeking its competitive prices in a context of high inflation.

Inventory adjustments and cost increases in the first few months of the year, combined with negative results in the international unit, caused earnings to fall more than 14 percent for the year to $11.6 billion.

In the fourth quarter, however, it grew 76 percent to $6.27 billion, according to results reported by Walmart to the U.S. Securities and Exchange Commission.

Walmart results : Q4 2022 and forecasts for 2023.

Walmart: forecasts for 2023

The global retail leader, however, estimates that growth will moderate throughout this year. In the first three months of 2023 it still expects to increase sales at a rate of almost 5 percent, but for the full year it will be around 3 percent, according to estimates.

The company’s accounts reflect the changes that inflation is causing in consumer habits in the United States, affected by rising prices.

While food sales are up more than 15 percent, sales in the “consumer discretionary” sectors are down 5 percent.

Food products include price and volume increases.

An important point is that the company was attracting customers who want to save in the shopping basket. But if they require more money for food, they will have less for other products.

Walmart highlights toys, electronics, home and apparel as some of the most affected sectors.

In other words, Walmart attracts more consumers who go to its stores to buy food, because it has low prices (always!, as the slogan says), but on the other hand, it sells less in other segments because people do not have any leftovers in their pockets.

This sales movement eroded margins at two points. On the one hand, food is sold with smaller margins and by increasing its weight in the total, it drags that measure down.

And on the other hand, the drop in demand for clothing and household goods led to deeper markdowns and discounts.

Walmart and its best markets

The North American market centralizes most of the company’s business. Sales grew more than 8 percent due to a 6 percent increase in the average ticket and a nearly 2 percent increase in transactions. December was the highest sales month in the company’s history.

“We are excited about the momentum we are going through. The company achieved a very good last quarter and, as the results of the last six months show, acted quickly and decisively to meet the inventory and cost challenges we face in 2022. In Q3 we were able to build momentum and continue to do so. We are well positioned to start this fiscal year,” Doug McMillon, the firm’s president and CEO, said in a statement.

Over the past 13 years, Walmart has undergone a major transformation in its business strategy to adapt to the rise of e-commerce and the digital age.

The retail giant has been taking more than risky steps to improve its online sales platform, optimize its operations and expand its global reach, especially in emerging markets such as India, in a bid to take on its biggest rival, the other giant, Amazon.

One of Walmart’s key initiatives to compete with Amazon was the purchase of Jet.com in 2016, an online shopping site that specializes in low-priced everyday products.

The Jet.com purchase helped Walmart expand its online presence and improve the efficiency of its supply chain, enabling it to offer competitive prices to customers.

In addition to the Jet.com acquisition, Walmart has been investing heavily in technology, data analytics and automation to improve the customer experience and drive sales growth.

Walmart has also been experimenting with omnichannel initiatives, such as “buy online, pick up in store” and same-day delivery services, to provide greater convenience and flexibility to its customers.

The company has been implementing these services in its stores, leveraging its extensive network of physical locations to create a seamless online and offline shopping experience.

Walmart’s global plan

To expand its global presence, Walmart has been focusing on emerging markets, particularly in India, where it has made a significant investment in e-commerce company Flipkart.

The acquisition of Flipkart for $16 billion in 2018 marked the largest purchase in the company’s history and its entry into the Indian ecommerce market, the new great Asian giant.

Walmart has been working closely with Flipkart to develop new initiatives, such as online grocery delivery, and has been expanding its Indian operations to better compete with Amazon.

Despite Walmart’s efforts, Amazon remains the dominant player in the e-commerce market, with a market share of more than 40 percent in the United States.

However, Walmart’s aggressive expansion into online sales and its omnichannel initiatives have helped it make gains (and very good ones), with ecommerce sales growth of more than 80 percent in 2021.

Home Depot’s slower growth

On the other hand, The Home Depot was unable to grow its sales at anything like the rate of inflation.

The U.S. home improvement, hardware, do-it-yourself and building materials retailer posted record revenues of $157.4 billion last year, which closed at the end of last month, up 4 percent in 2021. However, growth in the fourth quarter slowed to only 0.3 percent.

The Home Depot posted a net profit of $17.1 billion, also up 4 percent year-over-year and again with a slowdown in the fourth quarter. In the face of inflation, consumers are prioritizing must-have spending and furniture and décor companies are the hardest hit.

In the case of the U.S. company, financial debt in excess of 40 billion dollars is becoming a major drag on the bottom line as interest rates rise.

Finance costs rose nearly 20 percent in 2022 to $1.6 billion and 30 percent in the fourth quarter to $450 million.

“This past fiscal year was historic for the company,” Chairman and CEO Ted Decker said in a statement, noting that the retailer was already coming off two years where it had posted significant growth and continued to grow despite high inflation, ongoing supply chain disruptions around the world and a challenging labor market.

What Home Depot is up to

Home Depot is looking to improve the customer experience, optimize its omnichannel capabilities and expand its product offerings, all while competing with other major players like Lowe’s and Amazon.

One of Home Depot’s strategies is to provide a “seamless and personalized shopping” experience for its customers. The company has been investing in technology, data analytics and artificial intelligence to better understand customer preferences and behavior in physical stores.

The company has also been testing new initiatives, such as “in-store lockers” and curbside “pickup,” to provide greater convenience.

In addition, Home Depot has been expanding its product offerings to attract new customers and drive sales. It is doing so by adding new categories such as home décor and home furnishings to its stores and website, as well as partnering with outside vendors to offer new services such as home installation and design. Sort of like Ikea.

Home Depot faces stiff competition in the home improvement market, particularly from Lowe’s, its main rival.

Both companies offer similar products and services and have been engaged in a price war in recent years.

In addition, Amazon has been entering the home improvement market, posing a threat to both Home Depot and Lowe’s.

In effect, Amazon, through Amazon Home Services, is looking to compete with traditional home improvement retailers.