Walmart (WMT) Plans to Increase Investments in U.S. Manufacturing

Walmart Inc. WMT leaves a mark in every possible sphere it touches. The company, which has been focused on taking care of the needs of its own workforce, is also committed to creating job opportunities and benefiting communities in the United States. Incidentally, the supermarket giant unveiled a target of investing $350 billion toward the future of U.S. manufacturing over the next decade. Per Walmart, this is likely to facilitate more than 750,000 new jobs in America.

In this regard, the company has chalked out six priority categories, on which it plans to focus its investments. These include food processing, pharmaceutical and medical supplies, electrical appliances, plastics, textiles, and Goods Not For Resale (GNFR). Further, Walmart plans to introduce a new concept — American Lighthouses — which is likely to support U.S. production in a sustainable manner over the long term.

Through this concept, the company intends to unify the main stakeholders in particular regions of the country in order to point out and tide over the hurdles associated with U.S. production. Incidentally, these Lighthouses will unite participants from supplier groups, which include NGOs and manufacturers, along with others from the government, academia and local economic development groups.

Certainly, this highlights Walmart’s commitment toward the American community and employment. In an earlier development, the omnichannel retailer committed to investing $250 billion in products created, grown, or assembled in the United States. The abovementioned goal of investing $350 billion clearly reflects an expansion to this commitment.

Apart from this, Walmart has been focused on investing in its own workforce and creating opportunities. Evidently, in its fourth-quarter fiscal 2021 earnings release, management said that it is raising wages of another 425000 frontline workers, following wage hikes for 165,000 workers last fall. Also, the company has rewarded its associates with special cash bonuses amid the pandemic.

Talking of fourth-quarter results, this Zacks Rank #5 (Strong Sell) company’s earnings missed the Zacks Consensus Estimate. During the quarter, high COVID-19 costs and the repayment of property tax relief in the U.K. hurt the adjusted operating income. Incidentally, the company incurred roughly $1.1 billion as additional costs related to COVID-19. Moreover, management’s fiscal 2022 view suggests a decline in net sales, operating income and earnings per share, mainly due to divestitures. The company’s shares have lost 14.3% in the past three months compared with the industry’s decline of 11.1%.

Nonetheless, Walmart continues to gain on high pandemic-led demand, especially in the e-commerce channel that remained strong in all units during the fourth quarter of fiscal 2021. E-commerce sales surged 69% in the U.S. segment with strength across all channels and solid holiday sales at Notably, marketplace and pickup & delivery sales jumped at a triple-digit rate. At Sam’s Club, e-commerce sales jumped 42% on the back of a robust direct-to-home show and solid curbside performance. The company’s solid efforts to strengthen its online game have been helping it stay firm amid the rising competition from Amazon AMZN.

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