Breakingviews – Capital Calls: Walmart spreads the wealth

This post was originally published on this site

The logo of Walmart is pictured at a store in Monterrey, Mexico February 12, 2018. REUTERS/Daniel Becerril

NEW YORK (Reuters Breakingviews) – Concise insights on global finance in the Covid-19 era.


SCALING THE WAL. Walmart raked it in during 2020. Now comes the giving back. The $416 billion retailer said on Thursday it plans $14 billion of investment in technology, supply chain and other enhancements this year, a 26% increase year-over-year. Where operating profit growth outpaced sales in 2020, that will reverse in 2021. Investors were displeased enough to wipe around 6%, or $25 billion, off the company’s market value on Thursday.

That looks mean. Walmart’s main reasons for diverting profit into investment should be good for its long term value. The U.S. e-commerce business had 79% more sales in the year ended Jan. 31 than it did in the previous period. Raising average associate wages to $15 an hour seems less obviously good for shareholders. But it might cool the jets of politicians who think paying below $15 is positively inhumane.

The plan fits in with what Chief Executive Doug McMillon calls a “multi-stakeholder view.” And it’s not like investors are being forgotten: Walmart has authorized $20 billion of share buybacks over three years, the same as it greenlit in October 2017. But with shares in and the more digitally savvy Target performing almost three times as well as Walmart’s last year, not to invest would be the really expensive option. (By Amanda Gomez)


Reuters Breakingviews is the world’s leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

Sign up for a free trial of our full service at and follow us on Twitter @Breakingviews and at All opinions expressed are those of the authors.