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Revenue Projections: Where Is Walmart’s Sales Delta Coming From?

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Walmart (WMT) is projecting revenue growth of $45 billion–$60 billion on a constant-currency basis from fiscal 2017 to fiscal 2019. This implies sales growth at a CAGR of between 3%–4% over the period.

Walmart’s projections for incremental sales (XRT) are also higher than the annual sales posted by many of its rivals, including:

  • Publix Supermarkets (PUSH): $32.6 billion in sales last year
  • Supervalu (SVU): $17.8 billion in revenue
  • Delhaize (DEG): $24.4 billion in sales last fiscal year
  • Ahold’s (AHONY): $38.2 billion in sales

Ahold and Delhaize are scheduled to merge in 2016, which should result in increased synergies and higher competition in the US market. Walmart’s fiscal 2016 revenue came in at $482.1 billion.

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Sales growth drivers

Walmart’s strategy to expand its top line hinges primarily on square footage growth, both in the US and overseas. The company is also looking to drive higher traffic to its US stores, capitalizing on the trend seen in the last few quarters.

Walmart’s future investments focus: Physical stores

In the US market, Walmart (WMT) aims to focus more on the supersized supercenter retail formats and the smaller neighborhood format stores. According to Walmart’s CEO, Doug McMillan, who spoke at the company’s 2015 Investor Day, “The Supercenter is the greatest format in retail history.”

For fiscal 2017, Walmart has earmarked ~$9.9 billion in global investments for physical stores. This includes new store openings, relocations, expansions, and remodels for Walmart’s US and International segments.

The company plans to open between 342–405 new retail stores and warehouse clubs this fiscal year, including 50–60 supercenters and 85–95 neighborhood market stores in the Walmart US segment.

In fiscal 1Q17, Walmart opened 13 supercenters—including conversions and relocations—and 20 neighborhood market format stores.

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