Doug McMillon, Chairman and CEO of Walmart Inc. Corporation, participates in a business roundtable discussion on “The Future of Work in an Age of Automation and Artificial Intelligence” during a CEO Innovation Summit on December 6, 2018 in Washington, DC.
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FAYETTEVILLE, Ark. – Thousands of Walmart employees gathered in a large stadium on Friday, dancing like the Jonas Brothers headlined the return of the annual event that acts as a company pep rally. Despite the festive backdrop, however, CEO Doug McMillon acknowledged the new challenge facing the company: inflation.
Amid loud applause and celebrity acts, McMillon praised how employees around the world persevered through the pandemic while coping with staffing shortages due to Covid. He noted that sales rose even as stores struggled to keep shelves stocked. And he promised that the company would avoid repeating the disappointing first quarter resultswhen inflation devoured profits.
“We’re working to fix that and improve our performance as the year goes on,” he said, adding that Walmart’s workforce is “resilient and we love the challenge of retail.”
Later in the day, McMillon also stressed to analysts that the company is looking at its spending and putting pressure on suppliers to cut and absorb some costs. And he noted that Walmart is leveraging the experience of its leaders operating in Brazil and other countries with a history of high inflation.
“We’ve been working very hard on costs from top to bottom, taking steps to reduce our costs so that the second quarter looks better than the last, and we’re on our way,” he said at an investor event near the headquarters of the company. Headquartered in Bentonville, Arkansas.
His comments came just weeks after Walmart shares had their worst day in 35 years. In mid-May, the company reported a quarterly profit that was below Wall Street expectations as higher fuel and freight costs hurt earnings. Chief Financial Officer Brett Biggs also noted at the time that soaring inflation weighed on customers, with some buying half-gallons of store-brand milk and luncheon meats to save on grocery bills.
Walmart’s quarterly performance, and similar results by Goal — helped drag company shares and broader markets lower, with Walmart closing down 11.4% on the day it reported earnings. The company’s shares are down about 13% so far this year, roughly in line with the S&P 500 index.
Walmart’s annual meeting is known for its party atmosphere and traditionally coincides with its shareholder meeting.. Employees from around the world flock to the birthplace of Walmart for the event, sporting company apparel and waving their home country flags, at the Bud Walton Arena on the University of Arkansas campus. Friday marked the return of the event since the pandemic.
In a question-and-answer session with analysts, McMillon said the Walmart team has reacted “in a very detailed and aggressive way” in recent weeks as it pushes to become even more profitable.
“Some people in the company called it ‘old-school Walmart,'” he said, referring to the company’s nearly 60-year history of obsessing over details to keep prices down.
McMillon also noted that the company is closely watching the spending patterns of its most value-conscious customers and making sure prices on the staples that feed their families remain within reach. And as middle- and upper-income customers are also looking to stretch their budgets, he said Walmart will work to entice them with clothing and other items they may not have shopped at Walmart before.
He said it could ultimately help the company gain market share and boost profits.
“If the world is under more pressure and people in general are more value-conscious, we are the place to go,” he said.