Walmart distribution center in Wisconsin
America’s largest retailer is expanding its industrial portfolio to boost profits and increase delivery speeds, even as some competitors take the opposite approach.
Walmart said in its third-quarter earnings report Thursday that sales rose 5.2% to $160.8 billion and that it is expanding its supply chain through new distribution and fulfillment centers. It also plans to modernize and invest in other distribution centers already in its portfolio, KoStar reported.
The company said it operates nine regional distribution centers and has six more under construction. The new facility, which includes a 1.5 million SF high-tech center that opened last quarter, will double storage capacity and expand next-day or two-day delivery service to nearly 90% of the country.
“We expect our margins to increase over the next few years as we modernize our supply chain and expand our high-margin growth strategy,” John David Rainey, Walmart’s chief financial officer, said in an earnings call. “There is,” he said. “During the quarter, we made good progress in both areas. We continue to invest capital in building technology and optimizing our next-generation supply chain, and the benefits of automation and productivity are reaping results. It’s starting to show up.”
The company, which has 4,616 stores and 599 Sam’s Clubs across the U.S., is expanding its footprint but issued a warning to wary consumers about the upcoming holiday season, with shares falling 7.7% on Thursday, Reuters reported. Ta.
Unlike Walmart, other retail chains are putting the brakes on warehouse expansion as part of a cooling overall in the industrial market. Walgreens and Target have begun increasing investment in in-store fulfillment as they move away from large warehouses and distribution centers.
In recent months, e-commerce giant Amazon has introduced some new space into the sublease market, continuing an industrial exit it began last year. More space for sublease was listed in October than in any month since September 2022.