Walmart had a great quarter. They are making the right adjustments to fend off Amazon and they are moving and shaking. I agree with that, but this is an interesting video of one of their board members touting that Walmart will be a great company for the next 100 years. Is this SNL?!
While I think Walmart is very strong in the near term (company wise, I haven't dissected their financials), saying the company will be great for 100 years is delusionary. I'm sure Sears thought the same thing in the 1970's. Forty years later, Sears is bankrupt!
Claims like this bring up several things in my mind.
- Saying that Walmart will be great for 100 years is akin to saying to investors that you can buy the stock and forget it. Not so fast! There have been numerous periods in the past where it was claimed that an investor could buy a stock and forget it. Unfortunately, it always turned out to be a vast overstatement. The people who followed those words lost their shirts.
- Friar is a board member, so she's wrapped up in the "we're great mentality". In other words, she has a “vested bias” in the success of Walmart. At one point, she refers to the Walmart cheer. I haven't seen that level of enthusiasm at a Walmart since the high growth days of Sam Walton.
- We live in an economy that is moving and changing at an ever faster pace. If a company rests on their laurels for only a little time, they can lose their relevancy - and quick. Any CEO who drops the ball can turn that tide. Most CEO's have a tenure of less than 10 years.... and it's getting shorter. Even if every Walmart CEO had tenures of 10 years (which isn't happening), that means that it will go through 10 CEO's in 100 years. There is a high probability that there will be (as Buffett calls it) a "ham sandwich" running the company. How many great companies have been dropped from the DOW since 1900? Lots! GE was one of the few to make it over the 100 year mark, but it’s struggling now.
So, while Walmart is doing great in competing effectively with Amazon, I wouldn't go as far as saying Walmart will be great for 100 years - that's pure hyperbole. Makes me wonder what kind of people are sitting on their board other that the Walton's.
Did Jim Jones rise from the deep and is now offering some more purple juice? For me, I'll pass.
