Takeaways from Walmart’s AnalystFest 2013, Part 1

Last Tuesday, Walmart brought Wall Street analysts down to Arkansas to get them up bright and early and show them PowerPoint presentations for hours (aka the “20th Annual Meeting for the Investment Community.”) Our invitation must have been lost in the mail, but we’ve sifted through the transcripts, news reports, and PR spin, and have some takeaways of our own. Here’s the first set:

 

The holidays are really important this year—but is the in-stock problem already popping up?

Black Friday and the holidays are always important for retailers. But in the face of not-so-hot sales results so far this year, a back-to-school season that was only so-so for retailers, and tough questions from analysts about its plan for the company’s U.S. stores, Walmart really, really wants a good 2013 Christmas season. That’s one reason the company started hyping Christmas back in August, when it made an announcement about this season’s layaway program.

As for the amount of Christmas-related stuff that was out on sales floors as early as September—when Bloomberg reported Christmas lights stacked next to Halloween decorations—does that represent execs’ eager anticipation of Santa’s visit to the gated communities of Northwest Arkansas? Or might that be related to the in-stocks/inventory pile-up problem that may or may not exist, depending on which people you talk to and when you talk to them? (More on that later.)

 

Walmart U.S. COO Gisel Ruiz wants you to write that Walmart is making “significant progress” on the in-stocks problem. That does not appear to be the case.

Specifically, Ruiz suggested a thesis statement of sorts for analysts’ reports on the company’s U.S. segment: “The headline here is that we are serious about in-stock and we’re making progress.”

One would certainly hope the company is making progress according to its own measurements, given that it is openly rigging third-party in-stock audits.

Unfortunately for Ruiz, independent reports indicate that out-of-stocks persist. See, for example, retail expert Walter Loeb’s update about the Massachusetts Walmart store he found to be in “total disarray”: While he found the store to be much cleaner under new manager Leon White, “unfortunately the home office is not backing Mr. White’s efforts with sufficient merchandise.”

In addition, the camera doesn’t lie, and a recent Walmart store snapshot from Belus Capital analyst Brian Sozzi shows that problems with empty shelves are very much real:

 

And Walmart U.S. CEO Bill Simon wants you to know Walmart thinks there is no such thing as an inventory pile-up problem (even though it kind of admitted it was taking steps to address it)

Walmart went on a rampage following the September Bloomberg report about the company tackling high inventory by cutting orders from suppliers, calling Bloomberg’s reporting “so thin,” “misleading,” and “completely false,” and then tweeting that the report was “wildly inaccurate and irresponsible journalism.” Okay then! (Interestingly, company spokesman David Tovar originally told a reporter that some cutbacks were in fact occurring.)

In case all of that left you unclear on Walmart’s position about the report, Bill Simon said all of the following in an answer to one question from an analyst about inventory (emphasis added):

  • “Our inventory’s fine.”
  • “We reported at the end of the second quarter that, with some sales changes to what we had forecasted that [inventory] ended up a little high. I also reported [that] that was good inventory, largely food and consumables, in some of the areas that we hadn’t hit our number, and that inventory issue was gone.
  •  “Back to the merchandise question, I spent most of the day yesterday afternoon going over item by item the merchandise we’re going to sell Black Friday weekend and it’s phenomenal. It’s very exciting and the prices are going to be great and we did not cut inventory.

Bloomberg has said it stands by its reporting.

 

You will not be able to escape Walmart advertising this holiday season

“So as you can see…customers won’t be able to watch TV, search the Web, or look at their phones without seeing us at Christmas,” Duncan MacNaughton, Chief Merchandising and Marketing Officer, told analysts. In particular, the company will be ramping up advertising during football games and tripling its ad spend on mobile search. You can also expect to see constant Walmart ads amid the sequins and spray tan on Dancing with the Stars, and on Duck Dynasty.

By the way, Walmart appears to really, really love Duck Dynasty. So much so that we wouldn’t be surprised to see Mike Duke look like this the second he retires:

Mike Duke Duck Dynasty

More takeaways coming later this week in Part 2.

What do you think?