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Walmart Inc. will shut down Store No. 8, the big-box retailer’s startup incubator and innovation hub, the Wall Street Journal reported on Friday. It’s the latest move by a retailer to trim expenses and protect profits as shoppers continue to grapple with higher prices.
Chief Financial Officer John Rainey told employees in a memo that much of what Store No. 8 did had already been incorporated into the company’s operations as a whole, the Journal said.
“We’ve graduated capabilities from this operating approach that are now fully embedded in our organization,” Rainey said in the memo, according to the Journal.
“The responsibility to shape the future of retail is now shared by all segments,” he continued.
Walmart launched Store No. 8 in 2017 in an effort to experiment with new ideas, including augmented reality, artificial intelligence and new ways of delivering products, and to stay nimble in a retail landscape increasingly defined by online shopping. The Journal said that Scott Eckert, who led Store No. 8, was leaving the company.
Walmart did not immediately respond to a request for comment. Shares were up fractionally after hours, after finishing 0.5% lower during the day.
Walmart and other retailers have signaled that they are rethinking what technology to invest in and what stores to keep open. Those decisions would follow years of online-sales adoption, pandemic-related disruptions to shopping and a jump in prices for basics that began in 2022 and led people to shy away from buying things like laptops and clothing.
The Wall Street Journal, which first reported that news, said Macy’s intended to bring more automation to its supply chain and invest “in areas that impact consumers,” like visual displays in stores and efforts to smooth out the online-shopping experience.
The Walton family’s five-year rule as the world’s richest dynasty has come to an end.
The House of Nahyan, rulers of oil-rich Abu Dhabi in the United Arab Emirates, comes in at No. 1 on Bloomberg’s world’s richest families list for 2023, bumping the third-generation Walmart WMT, -1.05%
heirs that have long topped the rankings
The report released this week said that petroleum fortunes are “reshaping global business as never before,” and noted that the three Gulf families who made Bloomberg’s latest list of family fortunes are probably even wealthier than these “conservative estimates.”
The Al Nahyans of Abu Dhabi rule the list with $305 billion to their name, according to the report, which notes that the United Arab Emirates capital is home to most of the country’s oil reserves.
The Al Nahyan family holds $45 billion more than the Walton family, which owns 46% of Walmart — the world’s largest retailer by revenue. The Waltons have ruled the rankings for the past several years, but are now No. 2, worth $259.7 billion in the most recent fiscal year.
Rounding out the top three is the Hermès family, whose fortune can be traced to the French luxury house. The founding family is worth $150.9 billion, as they still own a two-thirds majority in the company.
As far as other Americans on the list, the Mars family’s confectionary collection of chocolate brands such as M&Ms, Milky Way and Snickers bars — not to mention pet products — land them in fourth place with $141.9 billion. And the Koch family, behind Koch Industries, is in sixth place with $127.3 billion.
The report added that the richest families have certainly gotten richer this year, with the world’s ultra-rich clans collectively adding $1.5 trillion — yes, trillion — to their wealth in the past year, a 43% increase over their already considerable fortunes in 2022.
So here are the world’s 10 richest families of 2023, as reported by Bloomberg.
Al Nahyan, ruling family of the United Arab Emirates, $305 billion
Walton, owners of Walmart in the U.S., $259.7 billion
Hermès, owners of Hermès in France, $150.9 billion
Mars, owners of Mars, Inc. in the U.S., $141.9 billion
Al Thani, ruling family of Qatar, $133 billion
Koch, owners of Koch Industries in the U.S., $127.3 billion
Al Saud, ruling family of Saudi Arabia, $112 billion
Ambani, owner of Reliance Industries in India, $89.9 billion
Wertheimer, owner of Chanel in France, $89.6 billion
Thomson, owner of Thomson Reuters in Canada, $71.1. million
Stock futures pointed higher Friday as Wall Street returned for a
shortened trading session following the Thanksgiving holiday. Retailers will be in focus on Black Friday, which marks the unofficial start to the Christmas shopping season.
Shareholders of Walmart Inc. may have had an inkling of today’s stock selloff if they had been watching the performance of its bonds over the last two weeks.
The bonds have seen net selling even as spreads have tightened, according to data solutions company BondCliQ Media Services.
The same is true for Costco Wholesale Corp. COST, -3.12%,
as the company’s stock fell in sympathy with Walmart on Thursday. That was after Walmart WMT, -8.11%
Chief Executive Doug McMillon said he expects to see a U.S. deflation trend in the coming months.
McMillon was the first retail executive to raise the specter of deflation on an earnings call this season so far.
The comment came after the retail giant posted better-than-expected third-quarter earnings, but offered per-share earnings guidance that was below consensus, sending the stock down more than 7%.
The following charts show what’s been happening with Walmart and Costco bonds in the run-up to today’s numbers.
Bondholders tend to be keenly focused on a company’s underlying financials and closely watched metrics such as cash flow to ensure it can cover interest payments.
That’s because, by buying corporate bonds, they are effectively lending money to a company for a set term and want to be sure they will get their full investment back once they mature. Shareholders tend to be more tuned into daily stock-price movements.
Bonds of Walmart and Costco Wholesale by maturity bucket. Source: BondCliQ Media Services
The following chart shows the two-week volume for the bonds by trade type.
Bonds of Walmart and Costco Wholesale — two-week volume by trade type. Source: BondCliQ Media Services
The next chart focuses on two-week client flows, showing net selling for both issuers over the period.
Bonds of Walmart and Costco – two-week net client flow. Source: BondCliQ media Services
The selling has come as spreads have been tightening, as the next chart illustrates.
Select bonds of Walmart and Costco – two-week spread performance. Source: BondCliQ Media Services
Walmart’s numbers come after other retailers this week said they are seeing signs of pushback from their customers, especially when it comes to big-ticket items.
That was the message from Target Corp. TGT, -1.00%
on Wednesday, with that company’s sales number lagging consensus. Chief Executive Brian Cornell the company saw soft industry trends in discretionary categories, as well as higher inventory shrink.
On Tuesday, Home Depot Inc. HD, -0.79%
said its customers were avoiding big-ticket items.
“The third quarter was in line with our expectations – similar to the second quarter, we saw continued customer engagement with smaller projects and experienced pressure in certain big-ticket, discretionary categories,” said Home Depot CEO Ted Decker, during a conference call to discuss the results.
Walmart topped third-quarter estimates and raised fiscal-year guidance. But investors were expecting more from the world’s largest retailer, sending the stock lower in premarket trading.
An earlier version of this article incorrectly said that Walmart’s stock has fallen this year. It has gained 20%. The article has been corrected.
Walmart Inc.’s stock tumbled 7.3% early Thursday, after the company offered guidance for 2023 that was below consensus, offsetting a profit and sales beat for the third quarter.
The Bentonville, Ark.-based retail giant WMT, +1.27%
posted net income of $453 million, or 17 cents a share, for the third quarter, after a loss of $1.8 billion, or 66 cents a share, in the year-earlier period.
Adjusted per-share earnings came to $1.53, ahead of the $1.52 FactSet consensus.
Revenue rose 5.2% to $160.8 billion from $152.8 billion, also ahead of the $159.7 billion FactSet consensus.
Walmart’s U.S. same-store sales rose 4.9%, while e-commerce sales rose 24%. Average transactions were up 3.4%, while the average ticket was up 1.5%.
Chief Executive Doug McMillion said the company saw revenue grow across segments and that it was getting an early start to the holiday season.
At the company’s international segment, growth in sales was led by Walmex and China. E-commerce sales fell 3%, while advertising grew 4%.
At Sam’s Club U.S., sales rose 2.8% to $22.0 billion from $21.4 billion a year ago, led by food and consumables, and healthcare. Same-store sales rose 3.8%, transactions were up 4% and average ticket was down 0.2%.
The company said it was raising its full-year guidance and now expects adjusted EPS of $6.40 to $6.48, but that was below the FactSet consensus of $6.50. It expects sales to grow 5% to 5.5%, while FactSet is expecting growth of 5%.
The stock has gained about 20% in the year to date, while the S&P 500 SPX, +0.16%
has gained 17%.
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This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com.
CHESAPEAKE, Va. (AP) — A Walmart manager opened fire on fellow employees in the break room of a Virginia store, killing six people in the country’s second high-profile mass shooting in four days, police and a witness said Wednesday.
The gunman, who apparently shot himself, was dead when police found him, Chesapeake Police Chief Mark G. Solesky said. There was no clear motive for the shooting, which also put four people in the hospital.
The store was busy just before the attack Tuesday night as people stocked up ahead of the Thanksgiving holiday, a shopper told a local TV station.
Employee Briana Tyler said workers had gathered in the break room as they typically did ahead of their shifts. “I looked up, and my manager just opened the door and he just opened fire,” she told ABC’s “Good Morning America,” adding that “multiple people” dropped to the floor.
“He didn’t say a word,” she said. “He didn’t say anything at all.”
Solesky confirmed that the shooter, who used a pistol, was a Walmart employee but did not give his name because his family had not been notified. The police chief could not confirm whether the victims were all employees.
Employee Jessie Wilczewski told Norfolk television station WAVY that she hid under the table and the shooter looked at her with his gun pointed at her, told her to go home and she left.
“It didn’t even look real until you could feel the … ‘pow-pow-pow,’ you can feel it,” Wilczewski said. “I couldn’t hear it at first because I guess it was so loud, I could feel it.”
President Joe Biden in a statement said he and first lady Jill Biden “grieve for the family, for the Chesapeake community and for the Commonwealth of Virginia.”
Gov. Glenn Youngkin tweeted that he was in contact with law-enforcement officials in Chesapeake, Virginia’s second largest city, which lies next to the seaside communities of Norfolk and Virginia Beach.
“Our hearts break with the community of Chesapeake this morning,” Youngkin wrote. “Heinous acts of violence have no place in our communities.”
It was the second time in a little more than a week that Virginia has experienced a major shooting. Three University of Virginia football players were fatally shot on a charter bus as they returned to campus from a field trip on Nov. 13. Two other students were wounded.
“I am devastated by the senseless act of violence that took place late last night in our city,” Mayor Rick W. West said in a statement posted on the city’s Twitter account Wednesday. “Chesapeake is a tight-knit community, and we are all shaken by this news.”
A database run by the Associated Press, USA Today and Northeastern University that tracks every mass killing in America going back to 2006 shows this year has been especially violent.
The U.S. has now had 40 mass killings so far in 2022, compared with 45 for all of 2019. The database defines a mass killing as at least four people killed, not including the killer.
The attack at the Walmart came three days after a person opened fire at a gay nightclub in Colorado, killing five people and wounding 17. Last spring, the country was shaken by the deaths of 21 when a gunman stormed an elementary school in Uvalde, Texas.
Tuesday night’s shooting also brought back memories of another at a Walmart in 2019, when a gunman who targeted Mexicans opened fire at a store in El Paso, Texas, and killed 22 people.
A 911 call about the shooting came in just after 10 p.m. Solesky did not know how many shoppers were inside, whether the gunman was working or whether a security guard was present.
Joetta Jeffery told CNN that she received text messages from her mother who was inside the store when the shots were fired. Her mother, Betsy Umphlett, was not injured.
“I’m crying, I’m shaking,” Jeffery said. “I had just talked to her about buying turkeys for Thanksgiving, then this text came in.”
One man was seen wailing at a hospital after learning that his brother was dead, and others shrieked as they left a conference center set up as a family reunification center, The Virginian-Pilot reported.
Camille Buggs, a former Walmart employee, told the newspaper she went to the conference center seeking information about her former co-workers. “You always say you don’t think it would happen in your town, in your neighborhood, in your store — in your favorite store, and that’s the thing that has me shocked,” Buggs said.
Walmart WMT, +0.74%
tweeted early Wednesday that it was “shocked at this tragic event.” In the aftermath of the El Paso shooting, Walmart made a decision in September 2019 to discontinue sales of certain kinds of ammunition and asked that customers no longer openly carry firearms in its stores.
It stopped selling handgun ammunition as well as short-barrel rifle ammunition, such as the .223 caliber and 5.56 caliber used in military style weapons. Walmart also discontinued handgun sales in Alaska.
The company had stopped selling handguns in the mid-1990s in every state but Alaska. The latest move marked its complete exit from that business and allowed it to focus on hunting rifles and related ammunition only.
Many of its stores are in rural areas where hunters depend on Walmart to get their equipment.
U.S. stocks closed higher Tuesday, but off the session’s best levels, after more data suggested inflation may be slowing and mega-retailer Walmart offered a rosier annual forecast.
The Dow turned negative earlier in the session after the Associated Press reported that Russian missiles crossed into Poland and killed two people, ratcheting up geopolitical tension given Poland is a NATO country.
How stocks traded
S&P 500 index SPX, +0.87%
rose 34.48 points, or 0.9%, to close at 3,991.73.
Dow Jones Industrial Average DJIA, +0.17%
climbed 56.22 points, or 0.2%, ending at 33,592.92, after touching a nearly three-month high of 33,987.06 earlier.
Nasdaq Composite COMP, +1.45%
climbed 162.19 points, or 1.5%, closing at 11,358.41.
On Monday, U.S. stocks finished near session lows after early gains evaporated. The Dow Jones Industrial Average fell 211 points, or 0.6%, while the S&P 500 declined 36 points, or 0.9% and the Nasdaq Composite dropped 226 points, or 2%.
What drove markets
U.S. stocks closed higher Tuesday, after another batch of inflation data showed that whole prices rises were slowing in October for the second straight month.
The Dow’s brief negative turn came after reports that Russian military bombarded Ukraine Tuesday. In the attack, missiles reportedly crossed into Poland, a member of NATO, the Associated Press said, citing a senior U.S. intelligence official.
“Geopolitical concerns obviously are never positive for the market,” said Peter Cardillo, chief market economist at Spartan Capital Securities.
On Tuesday, oil futures settled higher. West Texas Intermediate crude for December delivery rose to $1.05, or 1.2%, reaching $86.92 a barrel.
While markets had started to price in the toll of Russian’s nearly nine-month invasion of Ukraine, it had not priced in an potential escalation of the war, said Kent Engelke, chief economic strategist at Capitol Securities Management.
“Talk about geopolitical angst returning,” Engelke said, later adding, “If there were really missiles shot to Poland and that was really not an accident, wow, that is really increasing the scope of the war.”
A U.S. National Security Council spokesperson said the agency was aware of the news reports out of Poland, but that it cannot confirm the reports or any details at this time.
While international worries clouded the session, there was also encouraging domestic news.
The U.S. producer-price index climbed 8% over the 12 months through October, the Labor Department said Tuesday, easing from September’s revised 8.4% increase. Last week, stocks surged after the October consumer-price index rose more slowly than expected.
Tuesday’s PPI report helped support the notion that inflation has peaked, at least for now.
“Today, it’s really about the PPI and the market reaction to it,” Steve Sosnick, chief strategist at Interactive Brokers IBKR, +3.45%,
said in a Tuesday morning interview before the reports of missiles crossing into Poland.
Markets ripped higher last Thursday after October’s consumer-price index showed signs of easing. The same dynamic was playing out Tuesday, but the response now has been “a bit more muted” because it’s an iteration on inflation data that investors already had been starting to see, Sosnick said.
So, is the economy really at peak inflation? It’s too early to say for sure, according to Sosnick. Still, the PPI numbers, paired with last week’s CPI reading “does add evidence to that narrative,” he added.
Walmart’s third quarter earnings also were buoying markets, Sosnick said. The massive retailer’s beat on earnings offers a glimpse at the minds and wallets of many American consumers. For anyone who worries about consumers “getting highly defensive” and not spending, Walmart’s numbers are “counter evidence.”
In other news, the first face-to-face meeting between President Joe Biden and President Xi Jinping helped support stocks listed in China and Hong Kong, as some of the tensions between the world’s two largest economies were seen to be easing.
Analysts increasingly expect stocks to enjoy a positive end to the year. “The near-term picture still looks positive for U.S. benchmark indices and while momentum has reached intra-day overbought levels, this doesn’t imply a selloff has to happen right away,” said Mark Newton, head of technical strategy at Fundstrat.
Philadelphia Federal Reserve President Patrick Harker said Tuesday that he favored a 50 basis-point hike to the Fed’s benchmark rate in December. Atlanta Fed President Raphael Bostic said more rate hikes will be needed, even through there have been “glimmers of hope” on inflation.
Fed Vice Chairman for Supervision Michael Barr said Tuesday that the U.S. economy is likely to slow in coming months, and more workers will lose their jobs, in Senate testimony. The Fed is working with regulators to assess risks tied to cryptocurrency markets, following the collapse of FTX and its associated companies.
In other U.S. economic data, the New York Empire State manufacturing index for November showed a gauge of manufacturing activity in the state rose 13.6 points to 4.5 this month.
The yield on the 10-year Treasury note TMUBMUSD10Y, 3.774%
was down 6.7 basis points at 3.798%. Bond yields move inversely to prices.
Companies in focus
Walmart WMT, +6.54%
shares jumped after the giant retailer swung to a net third-quarter loss, due to $3.3 billion in charges related to opioid legal settlements, but reported adjusted profit, revenue and same-store sales that were well above expectations and a full-year outlook that was above forecasts. Walmart shares opened Tuesday at $145.61 and closed at $147.48, or 6.57% higher.
Home Depot HD, +1.63%
rose after the home improvement retailer reported fiscal third-quarter earnings that beat expectations, citing strength in project-related categories, but kept its full-year outlook intact. Home Depot shares opened Tuesday at $304.06 and closed at $311.99.
Chinese-listed technology traded sharply higher on Tuesday, including U.S.-traded ADRs for Alibaba Group Holding BABA, +11.17%, Baidu Inc. BIDU, +9.02%
and JD.com Inc. JD, +7.14%
The KraneShares CSI China Internet exchange-traded fund KWEB, +9.56%
also traded substantially higher.
—Jamie Chisholm contributed reporting to this article
In an unexpected move, furniture giant Ikea has sent a solo indie developer a cease and desist letter reviewed by Kotaku, demanding he make changes to his unreleased survival horror game set in an Ikea-like furniture store. Lawyers representing Ikea are claiming that the game commits trademark infringement because some press outlets have drawn comparisons between their official brand and the game. The Swedish firm have given developer Jacob Shaw just ten days to “change the game and remove all indicia associated with the famous Ikea stores.”
The Store Is Closed is an unreleased co-op survival game, that’s just in the final week of a successful Kickstarter campaign that’s raised just over $49,000. Created by a lone developer, going by the studio name Ziggy, the game describes itself as “being set in an infinite furniture store.”
“You’ll need to craft weapons, and build fortifications to survive the night,” continues the blurb. “Explore the underground SCP laboratories and build towers to the sky to find a way out.” You know, like in a real Ikea? Crucially, nowhere in any of the game’s promotional materials, on its Steam, during its Kickstarter campaign—nowhere—has the word “Ikea” ever been uttered.
Yet despite this, and despite the game absolutely not being on sale anywhere, Ikea’s New York lawyers, Fross Zelnick, have written to Shaw demanding that he entirely change anything in the game that might remind people of their brand.
“Our client has learned that you are developing a video game, ‘The Store is Closed’,” the legal letter explains, “which uses, without our client’s authorization, indicia associated with the famous IKEA stores.”
G/O Media may get a commission
A gift for literally everybody. Gifts under $20, $10, and even $5. It’s Wish, the catch-all shop for all of the above.
It then goes on to list the infringing aspects of Shaw’s game.
“Your game uses a blue and yellow sign with a Scandinavian name on the store, a blue box-like building, yellow vertical stiped shirts identical to those worn by IKEA personnel, a gray path on the floor, furniture that looks like IKEA furniture, and product signage that looks like IKEA signage. All the foregoing immediately suggest that the game takes place in an IKEA store.”
Shaw gave me access to an early alpha build of the game, during which the “blue box-like building” and “blue and yellow sign” appear, in their totality, on the menu screen. After that, you don’t see them. There’s currently no branding at all in-game. The store is called “STYR.” Clearly a joke spelling of “STORE,” it is, by coincidence, a Swedish word, meaning “controls.” You know what’s not a Swedish word? “Ikea.” It’s the initials of its founder, a farm he grew up on, and a nearby village. Notably, stores like Tiffany have a trademark over the color that they use in their packaging, so in some ways Ikea isn’t coming completely out of left field here.
Then there are the claims that it has “furniture that looks like Ikea furniture.” But Shaw disputes that he designed any furniture with Ikea in mind. “I bought generic furniture asset packs to make this game,” Shaw said, meaning that this is furniture that can be featured in any game for a price. “I don’t know what that means.” The game does, however, have a grey path on the floor. It is also common for stores to have signage that tells the customer where to go.
Ikea’s argument hinges that the game infringes on their brand because press sites have made the association, rather than the game itself aligning naming Ikea.
One headline says, ‘Someone Has Made a Survival Horror Game Set In IKEA.’ Another headline says, ‘The Backrooms meets Sons of the Forest in new IKEA horror game.’
Those were the two headlines we could find, but it’s possible there are more. The letter also includes the subheadings of these stories as part of the evidence, going on to then state:
“Further, numerous comments by readers of these stories make an association with IKEA stores.”
Based on all this, Shaw has been told that his “unauthorized use of the IKEA indicia constitutes unfair competition and false advertising under Sections 43(a) of the U.S. Trademark Act, 15 U.S. C § 1125(a), and state unfair competition and false advertising laws.”
The lawyers then tell the developer, “You can of course easily make a video game set in a furniture store that does not look like, or suggest, an IKEA store.” The presumed game development experts go on to explain, “You can easily make changes to your game to avoid these problems, especially since you do not plan to release the game until 2024.”
They then immediately go on to inform Shaw that he has “ten working days of the date of this letter” to make all such changes, removing all their claimed “indicia.” Grey paths and all. The game is not up for sale yet.
Ikea is a company that saw revenues of $25.4 billion last year, and Jacob Shaw is some guy in the UK who tried to raise £10,000 ($11,575) on Kickstarter, so Shaw says he has no choice but to comply. While he’s seeking legal advice, he’s certain he’ll have to capitulate, given the costs involved in challenging anything.
“I was going to spend the last week of my Kickstarter preparing an update for all the new alpha testers,” Shaw told Kotaku. “But now I’ve got to desperately revamp the entire look of the game so I don’t get sued.”
Clearly owners of trademarks have a legal imperative to protect them, lest they lose them and their brand becomes recognized as generic. Presumably that’s part of Ikea’s motivation here, as overreaching as it might seem to anyone not familiar with trademark law. Hopefully simply removing the blue box building on the menu screen should really be enough to get rid of the rest of this nonsense, not least because the U.S. luxuriates in far more reasonable allowances for spoof than the U.K.
We’ve contacted Ikea in both the U.S. (from where the threats originate) and the U.K. (where the game is based), along with trademark experts, to ask for comment, and will update should they reply.
