Walmart, Reporter, Bloomberg discussed on Bloomberg Businessweek


Because well it's Walmart and we pay attention to what they say about the health of the consumer the health of the world and some of those geo economic geo political concerns as well let's get into it with Matthew Boyle U. S. retail reporter for Bloomberg he's here with me in the bluebird interactive brokers studio and Jennifer bar Tasha's she is seen U. S. retail staples and restaurant analysts for Bloomberg intelligence she's on the phone from B. I. headquarters down in Princeton and not let me start with you we got the numbers from Doug but what jumped out at you as you were synthesizing this you know this company so well give us the new ones here well that's the thing is the synthesis that matters here I mean we first saw the top line numbers the sales beat they raised guidance for like okay this is going to be another good quarter for Walmart but as the day wore on as you can see now the shares are down and it's a combination of some old concerns and some new ones the old ones of course our gross margins all these wonderful things Walmart's doing online next day delivery sending groceries even into your house you know be delivered in your fridge while you're at work these are all great but they're very expensive so profitability gross margins were down again this quarter but then there's some new concerns you've got a management re shuffle you have no leader right now at their Sam's club warehouse division there cosco copy cat and Sam's club had a really poor quarter sales miss profit was down so you've got some new concerns as well we're heading into the holiday season you know everybody needs to be at the top of their game right so people are looking to poke some holes and looks like they found some well Jennifer while investors might be poking some holes you're smart note says that Walmart continues to invest in the long run at the expense of near term earnings and this is the right approach in your view why yes Sir so you know long term Walmart is is if if they want to be competitive long term especially against racing competitors and and if the Amazon dot coms of the world then the investment in the is the structure in the infrastructure and the business to build an E. commerce business is a necessary evil and that is laying down on short term earnings and everybody sort of expected that met makes a great point to gross margin geo is is still remains a concern but it's not a new concern and instead you know I think one of the other things that is coming out of today's earnings is just the idea that the E. commerce growth at Walmart is seeing is right now heavily skewed to food and adjusters you know over time would like to see a greater dependence on merchandise which is higher margin to help make that business a little bit less of a drag on the rest of the entity I'm so mad as you look ahead especially to the next few months what does Walmart need to do what are the proof points that may get investors a little bit more on site was just what they need to do is what they need to stop doing they've stopped making these acquisitions of small you know digitally native sites things like the novo smocks lost moose jaw that was a key element of my many orders just some made out you know some like dystopian science fiction reader well the job that some of them I seem to be made up these days because they're selling they've already sold mata cloth jet black which was a very expensive experiment in sort of text based commerce we've told we've heard is you know on the block so they're gonna be stopping making those acquisitions what they need to start doing is selling more apparel selling more home goods things that target their rival is very very right AT and has done for years Walmart is trying to get deeper into those two categories but it's just but it's a stretch you know when you think of sheep you know cheap chic you think of target mark you know Jennifer I understand that investors don't like the lower margin he grocery business except this appears to be the one area where Walmart is leading Amazon Amazon has to play catch up in the grocery space they're going out there trying to build a brick and mortar grocery store because that curbside pickup feels like it's starting to become more popular than the grocery delivery that Amazon is known for why not double down in Walmart's case on that he grocery delivery because it feels like they're such a leader in that space well I will say I don't think Walmart's really slowing down on on grocery or a grocery and they're continuing to expand the number of stores where you can do clicking collector is the number of locations that will deliver a to people's homes but you're right it is a competitive advantage that I think they want to be defensive about and so it's it's a great that it's it's it's blooming so much for them and when you look at Walmart versus Amazon in terms of geographic distribution the Amazon does does well enough when you're talking about urban areas where lots of people don't own cars and they would have things delivered to their house including groceries but the power of clicking collectors that it really uses the store base to really get to mainstream non urban America and those consumers are responding as well it's just that over time you'd like to see the the overall you commerce balance pick up a little bit more and then on to the side as well all right we're gonna leave it there are lots more to look at and with Walmart never an easy her straightforward story in many ways owing to its size scope and importance around the world certainly here in the United States Jennifer bar touches is it senior U. S. retail staples and restaurants analysts for B. I. she joined us on the phone from the Burke intelligence headquarters in Princeton and Matthew Boyle Matt Boyle U. S. retail reporter for Bloomberg here with me in New York City well coming up we're gonna talk a little bit about the opioid epidemic through the lens.

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