Walmart Q1 FY22 Earnings Call Recap

Strong and Patient quarter. More bullish leaving the call than I was before. Their model is a mix between Target and Amazon.

A few points:

1. They are starting to figure out the flywheel dynamics that Amazon perfected. In particular 1P/3P mix, WMT Connect (ads), and Walmart Fulfillment Services. The key phrase used was “shape of the P&L is changing”. This is what happens when you add new higher-margin revenue streams to the model.

2. Store Capacity I came away more bullish in Walmart’s investments in stores. Store Capacity is the big motivator behind its automation / micro-fulfillment investments. Faster picks and more windows. This type of logistics is stuff Walmart should be good at. I am more bullish on the Walmart vs the Kroger/Ocado approach because the fundamental investment is in the Stores, not in separate facilities which I think will prove to be a major strategic mistake for Kroger.

3. The biggest surprise I heard was that Walmart+ is not the biggest priority for them. Worries me because these investments should mostly be digital. It indicates a lack of talent in understanding consumer behavior and may point to a strategic weakness going forward that Target, Instacart, and Amazon can continue to take advantage of.