The Chinese market has once again become the highlight of Wal Mart Group's global performance.
On February 20, Wal Mart (NYSE: WMT) released its financial results for the fourth quarter of fiscal year 2024 (from November 1, 2023 to January 31, 2024). The total revenue of this retail giant in the fourth quarter was $173.4 billion, a year-on-year increase of 5.7%; The operating profit was 7.3 billion US dollars, a year-on-year increase of 30.4%. The total revenue for the fiscal year 2024 was 648.1 billion US dollars, a year-on-year increase of 6.0%; The operating profit was $27 billion, a year-on-year increase of 32.2%.
Specifically, in the Chinese market, the net sales of Wal Mart Group in the Chinese market in the fourth quarter increased by 11.3% year-on-year to $4 billion (about 28.78 billion yuan); Comparable sales increased by 6.6%; E-commerce net sales increased by 11% year-on-year.
Compared with the overall global performance growth of Wal Mart, the growth rate of the Chinese market is strong. In the past few fiscal years, Wal Mart has repeatedly praised the contribution of the Chinese market in its financial reports, especially the rapid growth of Sam's China and e-commerce business to its international business.
On the whole, the financial reports of the past three quarters of fiscal year 2024 show that Wal Mart's net sales in China are $5.3 billion (about 37.25 billion yuan), $4.1 billion (about 29.9 billion yuan), and $4.5 billion (about 32.62 billion yuan), respectively. Based on this, Wal Mart's net sales in China in the whole fiscal year 2024 are 128.5 billion yuan.
The growth of net sales, e-commerce sales and comparable sales of Wal Mart's China business in the last five fiscal quarters.
However, based on the two indicators of net sales growth rate and comparable growth rate, the growth rate in the latest fiscal quarter was the slowest among the past five fiscal quarters. Compared to a comparable sales growth of 13% in the fourth quarter of 2023, this figure was only 6.6% in the latest quarter.
In addition, the growth rate of net sales of e-commerce business has also slowed down. The growth rate of net sales of e-commerce business of Wal Mart China in the previous four quarters was 70%, 54%, 44% and 38% respectively, and the growth rate of 11% in the fourth fiscal quarter of 2024 appears to be extremely slow.
A retail expert told Interface News that the e-commerce shopping habits formed by people during the epidemic have indeed boosted the performance of major retailers in e-commerce and instant retail. However, after returning to normal life, some consumers will reduce the frequency of e-commerce shopping, which objectively will increase the customer acquisition cost of e-commerce platforms.
Wal Mart explained that compared with 2023, the Spring Festival in 2024 is relatively late, which has an impact on the sales growth rate. However, during Q4, Wal Mart China's gross profit margin was relatively stable, and e-commerce distribution costs were further reduced. Driven by sales growth, higher Sam's penetration rate, and efficient operations, the overall operating rate in Q4 decreased and revenue increased.
It is undeniable that Wal Mart China, especially Sam, took the initiative to cut prices when seizing market share with competitors last year, which may have some impact on its revenue and revenue growth.
Sam has lowered the prices of some popular products in response to Hema's "mountain price" promotion in stores since the second half of the year.
Taking the popular baking product durian layers as an example, the price of this product in cities such as Beijing and Shanghai is 85 yuan, a 33.6% decrease from the previous price of 128 yuan. The high repurchase rate of Australian fat beef rolls by members has reduced the selling price from 128 yuan to 118 yuan/1.1kg; The price of frozen salmon chunks has been reduced from 145 yuan to 135 yuan/1kg.
Sam stated that in the past 12 months, he has reinvested nearly 900 million yuan in product prices. By improving end-to-end efficiency and increasing the membership base, he has achieved long-term price reductions for dozens of products purchased by members on a daily basis.
Even if the growth rate slows down, Wal Mart is still the retailer with the second largest market share in China. According to the statistics of the market share of retailers by the consulting company Kaidu Consumer Index, in the year ending December 2023, Wal Mart Group will occupy 5.4% of the retail market in China, second only to Gaoxin Retail Group's 7.6%, higher than Yonghui's 5.3%, CR Vanguard Group's 4.4% and Wumart Group's 3.1%.
Screenshot from Kedu Consumer Index
Wal Mart China has also grasped the password of expanding in China, and expanded its share by tilting resources to Sam, who has more growth momentum.
In December 2023, Wal Mart China mentioned in its WeChat official account that it is expected that 6-7 new Sam's stores will open every year in the future, entering a period of rapid development. Since 2023, Sam has added 5 new stores in Shanghai Zhenru, Shenzhen Qianhai, Fuzhou Cangshan, Wuhan Hanyang, and Shanghai Jiading. As of the latest, Sam has operated 47 stores in China. Compared to the number of Sam's 36 stores at the end of 2021, Sam maintains a pace of opening a new store in about two months.
In addition, Sam also tries to match the multi-level and multi scenario needs of its member consumers through various online delivery services such as one hour express delivery, city wide delivery, and nationwide delivery. This has to some extent helped Sam's membership growth rate reach a historic high.
In addition to accelerating the opening of Sam's stores, Wal Mart has also continued to upgrade the format of its hypermarkets, trying to monopolize new products through differentiated products and channels with price advantages, reconstructing the image of Wal Mart's hypermarkets, and ultimately driving the number of customers in offline stores.
Interface News In January 2024, we saw in Wal Mart's Xuanwu store in Beijing that this old supermarket has streamlined its products after upgrading, providing hundreds of products with labels of 9.9 yuan and discount for multiple orders. Zhu Jun, chief procurement officer of Wal Mart China, also disclosed during the interview that after the upgrading of the first 29 hypermarket stores in China in 2023, more than 30 stores will be upgraded in 2024.
Wal Mart estimates that consolidated net sales in the first quarter of fiscal year 2025 will increase 4.0% to 5.0% year on year.