Walmart Board chair says retailer’s culture of risk taking, going big is ‘vibrant’

Climbing Mt. Everest is a good example of risk taking, doing something big. Walmart Inc. Board Chairman Greg Penner used his recent ascent of the world’s highest mountain to offer motivation to the around 14,000 Walmart employees gathered Friday (June 1) at Bud Walton Arena in Fayetteville.

Penner, who about 10 days ago was standing more than 29,000 feet above sea level, told the audience at the 48th annual Walmart Shareholders Meeting the first attempt to scale Everest was aborted when about half of the oxygen regulators failed just a few hundred feet from the top. The climbers descended back to base camp and were preparing to strike camp and end the effort to climb the peak. But, Penner said, the group decided they’d come too far to go back, and “cobbled together” enough working equipment for what would be a successful second attempt.

He said the experience is like the Walmart culture of “going big, taking risks and never giving up.”

An example of risk taking is the ongoing effort to experiment with connecting e-commerce with physical stores, said Penner, who is the son-in-law of former board chairman Rob Walton. In 2014, the company’s pickup service – where customers order products online and then pickup at a store – reached 2% of Walmart customers. In just four years, the reach is now 70%.

“It’s vibrant, and it’s back,” Penner said of the “culture of risk taking.”

Another example of risk taking is the $16 billion gamble in acquiring a 77% stake in FlipKart. The deal to invest in the Indian-based online merchant marks the largest acquisition in Walmart’s history in terms of purchase price, dwarfing the Jet.com deal of $3 billion in 2016, and the $9 billion it paid for Asda in 1999. Walmart is financing the deal with some debt and available cash from other international businesses, such as $10 billion it’s collecting from selling a majority stake of Asda to Sainsbury’s.

“Making bold changes is normal and expected, and the company will not let up,” Penner said.

FINANCIALS, ENTERTAINMENT
The shareholders event follows the company’s May 17 reporting of surprising first quarter financial results. Total revenue in the quarter was $122.69 billion, up 4.4% compared with $117.542 billion in the same quarter of fiscal 2017. The consensus estimate was $120.47 billion. The company also reported a 33% gain in e-commerce sales during the quarter.

Operating income during the quarter was $5.154 billion, down 1.6% from the same period in fiscal 2017. Most of the operating income decline was the result of a 3.1% drop in operating income in the Walmart U.S. segment, the company’s largest division.

But revenue and comp sales for Walmart U.S. were positive. Net sales in the segment totaled $77.748 billion, up 3.1%. Same-store sales – without fuel – were up 2.1% in the quarter. Store traffic was up 0.8%, and the average ticket was up 1.3%.

Net sales with Walmart International reached $30.26 billion, up almost 12% compared with the same quarter in fiscal 2017.

Comedian and move star Jamie Foxx served as Friday’s host. Foxx noted much had changed since he last hosted the event in 2009. Walmart reported $400 billion in revenue in 2009, with that rising to more than $500 billion in 2018. The retailer had around 7,900 stores worldwide in 2009, with that rising to more than 11,600 in 2018.

Other performers at the shareholders meeting included singers Carly Rae Jepsen, Cassadee Pope, X Ambassadors, and Mason Ramsey, the young yodeling sensation from Tennessee.

OTHER NEWS
Friday’s event also capped a week in which Walmart announced new and ongoing projects, and elected a new slate of directors. Following are some of the headline stories from the week.

• $1 a day college plan
Walmart is investing in college degrees for its U.S. workforce with a new benefit to any full-time or part-time worker wanting to pursue an associate’s or bachelor’s degree online. Walmart announced the education benefit Wednesday (May 30) as more than 4,400 employees are in Northwest Arkansas for the retailer’s annual shareholders week activities.

Julie Murphy, executive vice president of Walmart People division, told the media the retailer estimates about 68,000 of its U.S workforce might want to take part. The cost is $1 a day with Walmart subsidizing tuition, books and fees at the University of Florida, Brandman (Calif.) University and Bellevue (Neb.) University. Each school has online programming for business and supply chain management, two career areas Walmart is allowing employees to study.

• Jetblack beta test in New York City
The retailer is testing a white-glove shopping service in New York City dubbed Jetblack and co-founded by Jenny Fleiss, who joined Walmart last year. Fleiss announced to the media Thursday (May 31) Jetblack has been under beta testing with a select group of shoppers in Manhattan since the fall of 2017.

The cost of the white-glove shopping assistant is a monthly subscription price of $50. Fleiss did not say how many users are testing the service. She said it’s invite only and there is a waiting listing in Manhattan, with plans to roll it out to Brooklyn in the near future. For now the service is available to buildings with doormen. The goal is same-day delivery for requests made by 2 p.m.