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"Walmart CEO Warns Of Store Closings
As US Enters A Deep Dark Winter"
by Epic Economist
"Walmart is the largest retail chain on the entire planet, the indisputable industry leader, and a very well-established consumer favorite - but none of these attributes have kept the company from having a particularly difficult year in 2022, and it seems like more bad news just emerged. Since January, sales have been slipping, and the brick-and-mortar retailer has been struggling to compete with online retailers such as Amazon, which continues to seize an even larger share of the market. But those aren’t the only signs of trouble for Walmart. From inflation to overstock to over-hiring, the world's largest employer has been falling behind in recent months after taking a huge profit hit and seeing its shares rapidly plummeting. Now, CEO Doug McMillion is warning that even higher prices and more store closures could be on the horizon for the retailer as it faces painful inventory losses due to an ominous reason.
McMillion stressed that theft has become a major issue for the chain in recent months, and the rapid increase in the number of cases is leaving a dent in the company’s profit margins and causing distressing inventory losses. Even though the executive preferred not to point out which stores were being particularly affected by the problem, he noted that soft local policies have contributed to the surge in these types of offenses and that the lenient approach needed to be “corrected.” “If that's not corrected, prices will be higher and our stores will close,” he warned.
Just one month ago, the chief financial officer of one of Walmart’s biggest competitors, Target, also revealed that shoplifting at its stores had increased more than 50% year on year, leading to more than $600 million in losses in 2022 alone. Although Walmart executives have been notoriously secretive about how much of an issue shoplifting is for the company, in 2016, Bloomberg estimated that the superstore chain loses approximately $7 billion a year due to shoplifting, which represents about 2.5% of its annual profits.
This new wave of larceny couldn’t come at a worse time for the retailer. In its latest earnings report released on October 31, Walmart reported a net income loss of 15.36% compared to the same period a year prior, at $28.7 billion. Moreover, the chain reported an operating income of $2.7 billion in the past quarter, down 53% from $5.8 billion in the same period of 2021.
Walmart, though known as a discounter, is getting too expensive for millions of shoppers feeling the pinch of rising consumer prices. With inflation at a 40-year high, consumers are more aware of the rising food and fuel costs and they’ve been spending increasingly less, the company’s CEO noted analysts in a recent call.
Believe it or not, the finances of the world’s biggest retailer are being squeezed, too. And now the company is imploring suppliers not to rise prices and asking for discounts, according to The Wall Street Journal. The report notes that rivals like Target and Amazon are taking a similar tactic. All of them have also been canceling orders and seeking new ways to cut expenses. The strength of the industry leader is really being shaken by a list of problems that never seems to stop growing. 2023 may be a dark year for Walmart, and considering the pace at which things are turning sour for the retailer, customers may see many of its beloved local Walmart stores going dark soon."