Wal-Mart Stores Inc. (NYSE: WMT) has had a pretty good 2016 so far. The share price has risen by nearly 15.5% and the company’s market cap has grown by about $30 billion. In 2015, global sales slipped from $485.65 billion in 2014 to $482.13 billion, but expenses fell by $3 billion, even as the company invested nearly $4 billion more in selling, general and administrative (SG&A) for the year.
At a conference in South Africa last week, Wal-Mart CEO said that he expects to add $45 billion to $60 billion in new revenues over the next three years. The company is also going to fire 1,500 back office workers in its U.S. stores and close more stores. One of those actions will help boost profits and the other will cut expenses. Neither will raise revenues.
If Wal-Mart is going to increase its revenues by an average of $15 billion to $20 billion in each of the next three years, it better get have a big idea and move fast. First-quarter revenues fell by more than $14 billion sequentially and by a similar amount year over year.
What do investors see in Wal-Mart to justify the increases in its share price? Here are some points the company made at its last shareholders’ meeting:
- Reimagine its physical store experience
- Invest in its digital and mobile capabilities for seamless shopping
- Boost Walmart Pay as a convenient platform
- Expand the availability of online grocery ordering
- Turn real-time data into actionable insights
- Help customers get the best value and prices
- Invest in disruptive technologies with its R&D unit
- Transform its store greeters into more proactive customer service ambassadors
- Make more of an impact on the sustainability front
- Use drones to monitor its inventory by the end of the year
To get to a $15 billion revenue jump this year, Wal-Mart has first to dig itself out of an equally large hole. Does anything on that list look like a $14 billion idea?
Wal-Mart’s shares traded up about 0.3% Monday, at $71.13 in a 52-week range of $56.30 to $74.14.
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