At present almost all types of logistics markets are characterised by uncertainty. The US Government’s tariff policy is so extreme that it appears to threaten much of intercontinental trade. However, the perspective of Walmart during the presentation of its Financial Year 2025 results last week was a useful insight into how one of the world’s important shippers views its prospects.
Walmart is possibly the largest importer of hardwares, homewares, clothing as well as food into the US. It is also one of the largest importers of hardware and clothing from China. In a day of presentations to investors, Walmart’s senior management outlined not only the performance of the business over the past year but also its prospects over the next quarter and the next year. They were not pessimistic. ‘Top-line’ revenue growth for whole business over the year is expected to be between 3.0% to 4.0% with the US business is expected to grow slightly faster. Inventory has edged-up by 3% over the past 12 months, but is still fairly stable.
John David Rainey, Walmart’s Chief Financial Officer, commented that the retailer had been “operating in a highly dynamic backdrop for several years and we expect this year to be no different”. He continued, “our outlook assumes a relatively stable macroeconomic environment, but acknowledges that there are still uncertainties related to consumer behaviour and global economic and geopolitical conditions”.
Through the presentation, the sentiment of Walmart’s management was that although there was a risk from “geopolitical” forces, this was a continuation of the risk environment seen over the past several years. It could have an impact but it was unlikely to force Walmart’s growth trajectory too far from that of the past year. This was in part influenced by the opinion of the management of the Walmart business model. The combination of conventional sales robustness and e-retail volume growth had strengthened the business, according to the management, and this made it possible to exploit volatility.
What ever the strength of Walmart’s business model, the company’s sanguine view of sales is a useful corrective to any, understandable, alarm over the prospects for logistics in the US. Certainly, sea and possibly air freight may experience marked volatility, however road and rail freight may not be so badly hit if the American consumer continues to sustain spending on the trajectory seen over the past year. Walmart’s implicit observation that stronger business may benefit from uncertainty may also apply beyond retailing, suggesting that the logistics sector might see rationalisation as a result.
Author: Thomas Cullen
Source: Ti Insight
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