Walmart execs discuss ‘mission impossible’ successes, challenges

A ‘mission impossible” challenge from actor Tom Cruise to Walmart CEO Doug McMillon was part of the show witnessed by thousands of Walmart employees, shareholders and guests gathered Friday (June 2) at Bud Walton Arena at the University of Arkansas.

McMillon told Cruise – who spoke via a Skype call – he was busy at the moment and Walmart was already doing the impossible. McMillon did “accept” the challenge to make the impossible possible. He said the company has grown revenue by $125 billion in the past three years, noting that it took 36 years for the company to reach the first $125 billion.

McMillon said Sam Walton experimented with the first Walmart in Rogers, Ark., 61 years ago using $5,000 in savings, and a loan from his father-in-law to launch his retail brand. It was a mission that must have seemed impossible at times, McMillon said. He said Walton would be amazed at all the company has become, including surpassing $600 billion in sales this past year for the first time.

Walmart Board Chairman Greg Penner discussed shareholder meeting minutes from 1981 that mentioned “many challenges to the retail industry … high interest rates and a depressed economy.” But Walton would note, according to the minutes, that “we have confidence in our approach to discount retailing.”

LOW PRICES, INTERNATIONAL GROWTH PLANS
Analysts during the question and answer session of the day repeatedly asked Walmart about the persistent inflation pressuring household spending. Walmart was asked about the tipping point to pressure suppliers to stop passing along higher prices now that many commodity and supply chain expenses have abated. McMillon said Walmart does not strong-arm suppliers to lower prices, but given the company’s assortment of private brand alternatives it can still offer values across the entire store.

Walmart U.S. CEO John Furner said Walmart is pleased with the value it is providing customers through private brand alternatives and a broad rollback program with suppliers to lower prices on named brands. He said “inflation is stubborn, even though there is tailwind from lower supply chain costs, there are headwinds from more of the basket being comprised of groceries today.”

When asked how Walmart was preparing for a recession, the execs said it’s their job to keep prices low regardless of what is happening in the macro-economy. Furner said Walmart checks its price gaps with competitors every Monday, across the markets where it operates and for now the range is good. With respect to shrink – product theft/loss – that has been widely talked about in the retail industry, Furner said Walmart’s inventory is down considerably from a year ago and that helps with shrink.

Sam’s Club CEO Kath McLay said having top quality items at disruptive prices are what helped fuel the warehouse club growth to $84 billion last year. She said being member obsessed is the other secret sauce to Sam’s success and making the impossible possible.

“Our members wanted to smell the roses, so we worked to bring more fragrant flowers into clubs and sold over 50 million roses last year sourced from our supplier in Ecuador. Even during inflationary times our flower sales were up 60% last year because when you have the best products that members want and sell them at disruptive prices you win.” she said.

Perhaps the biggest impossible mission was one announced by Walmart International CEO Judith McKenna who said the $100 billion business could be $200 billion in five years. She said opportunities in Mexico and India will provide additional revenue sources and the growth of international marketplaces would be the key to that success.

“Our 20 countries have plans in place to make this happen,” she said.

AWARDS, CELEBRITIES
The annual Sam M. Walton Entrepreneurship Award went to Prathiba Rajashekhar, senior vice president of automation and innovation, who received the award for work she did last year while serving as the private brands and sourcing exec for Sam’s Club. She led a team that reformulated and redesigned more than 1,000 Members Mark Items to be earth friendly.

Walmart’s shareholder celebrations for employees are known for the star-studded talent that performs on stage. Friday’s event opened with Shania Twain, who performed three former hit songs bringing thousands to their feet. Other performers who took the stage with musical talents were John Legend, Snoop Dog, Rachel Platten and Pitbull.

Actor and comedian Kevin Hart hosted the event and hawked his VitaHustle vitamins and drink mixes. He also brought on actors Chris Hemsworth and Chris Evans who also pitched their health and wellness products and pet food now in Walmart stores.