Global retail giant$Walmart Inc (WMT.US) $Recently, the stock price has ushered in a "great change".

Walmart Inc's share price fell more than 11% on May 17, the biggest one-day decline in 35 years, and the market capitalization lost more than 300 billion yuan overnight.

Then, it fell nearly 7% on Wednesday, the lowest share price since July 2020, and nearly 3% on Thursday.

Share price "thunder", and Walmart Inc recently announced the first quarter of 2022 financial results.

In the first quarter of 2022, the company achieved total revenue of $141.6 billion, up 2.4 per cent from a year earlier, but did not increase profits, with net profit of $2.05 billion, down 24.8 per cent from a year earlier, according to the results.

On the conference call, Walmart Inc's chief financial officer, Bearet Biggs, said: supply chain disruptions, rising costs and persistently high inflation in the first quarter have all made Walmart Inc face challenges.

What happened to Walmart Inc, who has topped the list of the world's top 500 for eight consecutive years? How does Walmart Inc China, which is more concerned by domestic consumers, perform?

Part one:The basic market has been greatly impacted.

From the perspective of Walmart Inc's revenue structure, the business is mainly divided into three sections. they are Walmart Inc USA (mainly including Walmart Inc hypermarkets and e-commerce business in the United States), Walmart Inc International (mainly including supermarkets, supermarkets and e-commerce businesses in countries and regions outside the United States) and Sam's Club Store (mainly including Sam's Club in the United States and Puerto Rico).

Specifically:

First of all, Walmart Inc the United States is undoubtedly Walmart Inc's "stronghold."In the first quarter of 2022, Walmart Inc's US sales were $96.904 billion, up 4 per cent from a year earlier, while operating profit was $4.462 billion, down 18.2 per cent from a year earlier. Sales account for 69% of the enterprise's total sales, and operating profits account for 84% of the total profits of Prida.

The second is Walmart Inc International.Sales of the business in the first quarter of 2022 were $23.763 billion, down 13% from a year earlier; operating profit was $772 million, down 35.3% from a year earlier; both sales and operating profits fell sharply. The financial report shows that the decline is mainly due to Walmart Inc's sale of business in Argentina, the United Kingdom and other countries.

And finally, Sam's Club.Sales in the first quarter of 2022 were $19.662 billion, up 17.5 per cent from a year earlier, while operating profit was $460 million, down 20 per cent from a year earlier.

On the wholeIn the latest quarter, both Walmart Inc USA and Sam's member stores have increased their income without increasing profits. Walmart Inc's international sales have been greatly affected, and both revenue and profits have declined.

As for the sharp decline in operating profits, Walmart Inc mentioned in the financial report that it was mainly affected by the two core businesses (Walmart Inc America and Sam's Club).

Among themThe increase in sales was mainly due to transaction growth and inflation.；而The decrease in operating profit was mainly due to higher supply chain costs, including fuel and compliance, and higher-than-expected price reductions for goods.。

In the earnings call, Walmart Inc added that factors affecting profits also include an increase in inventory due to inflation, an increase in wages and expenses, and at the end of last year, in order to make up for the labor gap caused by COVID-19 infection, Walmart Inc hired a lot of new employees. But in the first half of the first quarter of this year, many employees recovered faster than the company expected, resulting in a surplus of staff for several weeks.

However, in this quarter's results, there is also good news. According to the financial report, the member income of Sam's Club increased by 10.5% compared with the same period last year.

The increase in member income shows thatThe number of new users of Sam's Club is increasing, and the repurchase rate of old users will not be too bad.。

The second part:The hypermarket is not as expected in China.

In Walmart Inc's financial report, China's Walmart Inc hypermarket is reflected in the "Walmart Inc International" business.

The financial report shows that the business is limited by the COVID-19 epidemic and logistics delivery.Sales growth in the Chinese market is "lower than expected"。

Specifically,In the first quarter of 2022, Walmart Inc's sales growth in China was the slowest in the existing market of Walmart Inc International.Same-store transactions grew by only 0.2 per cent; that was well below the 6.2 per cent growth in Mexico and Central American countries and 10.6 per cent in Canada.

In fact, the overall decline of Walmart Inc supermarkets in China in recent years is obvious.

Recall the glory of Walmart Inc supermarket: in 1996, Walmart Inc moved into inland China and opened the first Walmart Inc shopping mall in Luohu District, Shenzhen. At that time, this novel commodity display, various promotional means and one-stop shopping experience aroused the enthusiastic support of consumers.

Since then, Walmart Inc has been enclosing horse races in China. By 2014, Walmart Inc has opened more than 400 stores in more than 100 cities in China.

But the good times did not last long. With the intensification of competition among Chinese local enterprises and the impact of the tide of e-commerce, Walmart Inc began to feel difficult in the Chinese market.

In recent years, related news such as "Walmart Inc shuts down shop" also appears frequently in the news topic.

Statistics show that Walmart Inc closed about 80 stores in China from 2016 to 2020.By September 2021, the number of Walmart Inc stores had dropped to 378, which made Walmart Inc fall to fourth place in the ranking of stores in large supermarkets in China.。

Of course, Walmart Inc is also seeking "self-help". In order not to be left behind, Walmart Inc has been working hard to move to the front in recent years, such as wholly-owned acquisition of No.1 store, stake in JD.com and its in-depth cooperation.

Now Walmart Inc has JD.com 's first-level entrance, as well as his own App and WeChat Mini Programs; but the Internet giants are menacing with traffic and capital, which makes it difficult for Walmart Inc to occupy a dominant position online.

In additionAs far as Walmart Inc's internal management in China is concerned, senior executives also change frequently.

According to public data, Walmart Inc has replaced an average of one president of China every two years since 2012, and every personnel change and turnover will inevitably change and affect the original business strategy. It will also have an impact on Walmart Inc's development in China.

Walmart Inc has been in China for more than 20 years, it is undeniable that Walmart Inc supermarket in China has not been as expected, began to show their own ceiling.

The third part:Choose "bet" Sam's Club.

Unlike the "closed" shopping malls, Walmart Inc said in a high profile that it would continue to expand its stores in the central areas of China's first-and second-tier cities, and the expansion of Sam's clubs will also become an important strategy for Walmart Inc in China.

The so-called Sam's Club, the high-end membership store under Walmart Inc, is now one of the largest membership stores in the world and entered the Chinese market in 1996.

The reason why Walmart Inc wants to vigorously expand Sam's club in China, the reasons can be summarized as the following two points.

First of all, in recent years, the proportion of middle and high consumer groups in China's first-and second-tier cities is increasing, and the urbanization rate continues to improve, which lays the foundation for the development of warehousing member stores.

Secondly, in recent years, due to the impact of the epidemic and new Internet models such as fresh e-commerce and community group buying, the competitiveness of traditional "one-stop shopping" appears to be insufficient. In the face of the predicament of the development of traditional retail, Walmart Inc chose to expand the warehousing member store, a relatively new format, to meet the diversified needs of consumers through the scene shopping experience and high-quality and low-price goods.

The pace of opening Sam's club in China has accelerated significantly since 2017, according to Walmart Inc China data.

By the end of 2021, Walmart Inc had opened 36 Sam's club stores with 4 million members in 22 cities in China. Walmart Inc also plans to increase the number of Sam's club stores to 40 to 45 in 2022.

The characteristics and advantages of Sam's club operation are as follows:

First of all, it is the member payment system.Sam's store through the membership model, on the one hand, can enable the positioning of high-end Sam's club to screen out non-core consumer groups, while strengthening user stickiness; on the other hand, enterprises can also through member big data, understand consumer demand and then optimize the product structure.

Second, warehousing member stores have less SKU.Unlike tens of thousands of SKU in traditional hypermarkets, warehousing member stores choose to do subtraction on SKU to control the SKU at about 4000-5000.

The advantage of "boutique SKU" is that, on the one hand, it can reduce the enterprise procurement process, thus reducing the logistics, labor and operating costs of enterprises; on the other hand, it can effectively improve the efficiency of space utilization and improve the speed of product turnover.

However, the obstacles to the future development of Sam's Club are also more obvious.

On the one hand,At present, Sam's club is actually not very profitable.. According to the financial report, from 2017 to 2021, Sam's membership fees accounted for a proportion of revenue basically in line with its net interest rate.

In addition, a relevant person told the Red Star Capital Bureau"the membership fee is a net income for Sam's Club, with almost no cost. "

This actually shows that although the per capita unit price of Sam's Club is very high, the gross profit recorded from the sale of goods can only be used to cover the expenses needed by the business. That is to say,Sam can't really make any money except for the membership fee.

On the other hand, competition in the industry intensifies.. Now all kinds of capital and traditional supermarkets are targeting warehousing member stores, and regard it as a new industry outlet.

For example, in October 2020, the first Hema X member store was settled in Shanghai, and two months after its opening, it was announced that it would make a profit; in May 2021, the world's first fudi warehousing member store opened in Beijing; in September 2021, Beijing Hualian opened its first warehouse member store in Lanzhou; in December 2021, Jiayue opened its first national member store in Jinan.

Therefore, for Walmart Inc, in China, "bet" Sam's club, although there is a first-mover advantage, but the challenge is not small.

Summary:

Now, Walmart Inc is 60 years old. As a global retail company, Walmart Inc is naturally under a lot of pressure from near-term worries and far-sighted thoughts. At least in the Chinese market, Walmart Inc has long lost his "halo", leaving only the figure that he is "tired of facing the challenge".