Walmart is placing a bigger emphasis on online sales, with the company’s executives saying they are cutting more costs to free cash for new eCommerce initiatives and store improvements. The company hopes the new moves will help it remain competitive.
According to a report in the Wall Street Journal, an investor meeting held Tuesday (Oct. 10) revealed executives plan to keep the number of new store openings in the U.S. to a minimum and reduce expenses as a percentage of sales.
“We are not where we want to be from an expenses standpoint,” Brett Biggs, chief financial officer, told analysts, the WSJ reported.
In fiscal 2019, Walmart plans to open less than 25 new stores in the U.S. and overhaul its existing ones. The company is also planning to spend money to enhance its eCommerce infrastructure and services, and expand elements like home grocery delivery, the WSJ article said. In fact, Walmart is targeting online sales in hopes of seeing an approximately 40 percent increase next year in the U.S.
Meanwhile, Walmart’s CEO Doug McMillon said the retailer is working on several different ways to deliver groceries to customers’ homes, such as tapping employees, inking deals with delivery workers and using third-party services.
“I believe the vast majority of grocery shopping will happen in stores for a long time,” McMillon noted.
On the cost-cutting front, Walmart’s CFO says it will institute zero-based budgeting in other units of the sprawling company. It is a strategy in which each business expense has to be justified every quarter. The paper noted Walmart earlier moved to shorten the length of receipts in the store, saving it $7 million so far in 2017. The WSJ noted zero-based budgeting is more common with consumer products and packaged goods.
The retailer also announced it will buy $20 billion in shares in a new buyback program to last two years. It will replace a similar announced in October of 2015.