NEW YORK — The world’s largest retailer plans to grow sales by $45 billion to $60 billion in the next three years and spend $20 billion buying back its own shares.
The growth targets, stock buyback program and an $11 billion capital expenditure program, down from $12.4 billion this year, were announced Wednesday morning at the retailer’s annual fall investor conference.
“We are uniquely positioned to win with the future of retail,” Wal-Mart Stores President and CEO Doug McMillon told attendees, echoing what has been a familiar omnichannel theme for the company in recent years. “We will be the first to deliver a seamless shopping experience at scale.”
Achieving that goal is key to the company’s long term growth, but to get there the company disclosed the significant investments it has made in technology, wages, pricing and a weak dollar will pressure profits. Walmart CFO Charles Holley said the company’s earnings per share, which are projected to decline this year compared to last year, will fall another 6% to 12% next year as investments in the business peak. However, within three years, profits are forecast to rebound and grow between 5% and 10%.
Investors were looking for a faster growth trajectory which explains why following the release of the three year profit forecast shares dropped roughly $5 to hit a new 52-week low near $60. Anticipating such a negative reaction, Holley announced Walmart had authorized a new $20 billion share repurchase program and committed to spend those dollars within two years even though it had $8.6 billion in authorization remaining under the existing program.
In addition to emphasizing the big stock buyback program, Holley reminded attendees that Walmart is committed to paying dividends. He stop short of providing a growth target but noted the company has increased the payout for 42 consecutive years.
In addition, Holley and CEO McMillon alluded to the possibility of disposing of assets, a topic which had not been addressed as overtly in prior meetings. When addressing the growth topic of being strong in priority markets, McMillon said, “We’ve exited businesses before but we don’t believe in shedding assets in a hurry for less than they are worth.”