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BENTONVILLE, Ark. — Walmart is forecasting an earnings decline of between 6% and 12% in the fiscal year ending in January 2017 as the company invests heavily in people, technology and its supply chain.
Walmart is forecasting an earnings decline of between 6% and 12% in the fiscal year ending in January 2017 as the company invests heavily in people, technology and its supply chain.
"Fiscal year 2017 will represent our heaviest investment period," chief financial officer Charles Holley remarked during the retailer’s annual investor conference in New York on October 14. "Operating income is expected to be impacted by approximately $1.5 billion from the second phase of our previously announced investments in wages and training as well as our commitment to further developing a seamless customer experience."
Walmart has been investing in its workforce and e-commerce capabilities as it seeks to bolster sales growth. Walmart raised its base employee wages to $9 an hour in April and plans to increase base hourly pay to at least $10 next year. When combined with an expanded training program, the workforce investments are expected to add about $1 billion in costs this year and $1.5 billion next year, Holley said.
Walmart executives also forecast an increase in annual sales of between 3% and 4% over the next three years, and predict earnings will rebound by as much as 10% in fiscal 2019.
"The great news for us is, the assets we already have — our stores, our distribution centers, our great associates — are still relevant in the future," commented Doug McMillon, Walmart’s chief executive officer. "But leaning into investments in people and technology and, in these next few years, intelligently into prices, will create the situation that enables us to win in the future."
Earlier this month, Walmart laid off 450 employees at its corporate headquarters, a move McMillon said would help accelerate decision making. "We need to become a more agile company that can easily adapt to shifting customer demand," he said in a memo to Walmart employees. McMillon described the layoffs as part of a reorganization and review that will see the company pull back on its investments in some areas and expand in other areas of the business.
Earlier this month, the company promoted Steve Bratspies to chief merchandising officer for Walmart U.S. Bratspies had been executive vice president of food for Walmart U.S.
In his new role, Bratspies has oversight for all merchandise categories across more than 4,500 stores. He continues to report to Greg Foran, president and chief executive officer of Walmart U.S. Bratspies fills the vacancy left by Duncan Mac Naughton, who departed Walmart last November to pursue other opportunities.
Bratspies is credited with overhauling the grocery aisles at Walmart’s stores in the United States by improving the fresh food offering and expanding private brand and global sourcing capabilities.
Since joining Walmart in 2005, Bratspies has held leadership positions in marketing, dry grocery and general merchandise.
Walmart also announced that Holley plans to retire at the end of the year and that he will be replaced as CFO by Brett Biggs, now CFO for Walmart International.
Plans call for Holley, 59, to retire on December 31 and stay on for a month to assist in the transition to Biggs. Holley has served as Walmart’s executive vice president and CFO since December 2010.
"Charles has overseen our global finance and strategy areas during a period of immense company growth and change," McMillon commented.
"He has been instrumental in shaping Walmart’s strong financial position while driving significant shareholder returns. One of Charles’ strengths is talent development and succession planning. Under his leadership, Walmart’s finance function has transformed into a best-in-class organization that is both strong and deep, highlighted by [the] appointment of Brett as our new CFO."
Biggs, 47, has served as executive vice president and CFO of Walmart International since January 2014, overseeing international strategy and finance activities, including business planning and analysis, financial services and support for real estate and mergers and acquisitions.
Biggs, who joined Walmart in 2000, served as CFO of Walmart U.S. for two years and as senior vice president and CFO for Sam’s Club.
Earlier, Biggs served as senior vice president of corporate finance and assistant treasurer, and he served a stint as Walmart’s senior vice president of international strategy and M&A.
