Simon talks leverage, growth at retail conference

Walmart U.S. CEO Bill Simon delivered an optimistic message about Walmart U.S.’s performance during the first quarter and its potential for the coming year during a presentation at a Morgan Stanley conference in Boston Wednesday. Ahead of the Walmart’s upcoming shareholders’ meeting, Simon talked about leveraging a more efficient supply chain to drive costs down, lower prices and improve traffic and shared insights on the company’s plans for growth in the second quarter and beyond.

Simon noted that during the first quarter, all merchandise categories were positive, with the exception of electronics. He was particularly pleased with apparel, and how the company’s focus on basics over fashion has paid off.

Looking back at the past five quarters, Simon was pleased to point out the improved efficiency of the supply chain. He noted that while store count has grown tremendously, the number of distribution centers remained the same, and that while the company will invest in its existing DCs, it has no plans to build new ones this year or next.

“Lower expenses, lower prices, drives traffic, drives comps and fuels the productivity loop.”
Simon said Walmart stores are starting to see the same efficiency as the supply chain and that its business is coming together to deliver a better experience for both Walmart shoppers and investors.
“If we can lower the price for our customer and still please our shareholders, we should lower the price all day long.”
Looking ahead, Simon said the company sees a lot of potential with its smaller-format Walmart Express stores.

“We’re very happy with the top line,” said Simon. “But, what we’re finding is that inside of 12 months they turned profitable.”

Another area of potential growth will be Walmart’s Neighborhood Market stores. During the second quarter the company expects to open 16 stores, and by the end of the year will double its existing store count by about 50%.

Walmart has not forgotten about the supercenter, which “remain a great growth vehicle.” The company plans to open more than 100 new supercenters (including new stores, new locations and expanded locations) this year.

To listen to the full presentation, click here.


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