Walmart bets on warehouse robots, dangles profit potential

BLOOMBERG

Walmart Inc is betting on greater supply-chain automation and hinting that a recent investment binge might lift profit beyond the retailer’s stated long-term goals.
Within three years, the unit cost of moving goods will fall 20% as warehouse robots play a larger role in speeding goods to customers, Walmart said. While the company reiterated its outlook for this year and the longer term, the opportunity to boost operating income “could be better than what we’ve outlined,” said Chief Financial Officer John David Rainey.
The world’s largest retailer is trying to show off its long-term earnings potential to Wall Street after ramping up capital expenditures in recent years to keep pace with Amazon.com Inc and other rivals. Walmart says its revamped supply chain will enable it to ease cost pressures tied to the rise of e-commerce and help end a decade of stagnation in US operating income.
“The investments we’ve made have positioned us well and stand to generate steady and sustained growth at higher margins,” Rainey said in the statement, which Walmart released during the first of two days of meetings, store tours and warehouse visits with financial analysts.
Walmart pointed to a blueprint for the future at a sprawling distribution centre in Brooksville, Florida, about 40 miles (65 kilometres) northeast of Tampa. Inside, where employees used to manually unload cases of goods from truck trailers, autonomous forklifts now do much of the work while people step in to handle problems the machines can’t solve.
“Now I’m watching the robot unload the truck,” said Jose Molina, a veteran employee. He and colleague Allen Hala, who spoke with reporters accompanied by Walmart executives, recalled the old system of physically demanding labour and cumbersome paperwork to track merchandise.
“We used to be exhausted leaving here,” Hala said. “I actually go home and do a lot more now.”
One of Walmart’s 42 ambient-temperature regional distribution centres, the Brooksville building covers 1.4 million square feet (130,000 square meters), or the equivalent of about 24 American football fields.