David Rosenthal: belief

Transcript context

…All right, Walmart today. We have talked some about this, but I think it's worth recapping what the shape of the company is actually at this point. They're in 24 countries, which we haven't discussed. They're a global empire at this point. There are 10,500 stores. Each week, 230 million customers visit one of these stores—203 million customers, that's wild. The supercenter concept is basically Walmart now. It wasn't like some of the stores are supercenters. Most stores are now supercenters. If you just think about the standard Walmart discount store in 1996, there were about 2000 of them. Now there are 368 because the supercenter is the new thing. The business supercenters did close to $600 billion of revenue last year. They did $25 billion of operating income. That's only about a 4% operating margin for those counting at home. They do have a 24% gross margin, which is interestingly higher than in Sam's heyday, what he sort of believed the discounting business model should bear. If I were to sort of postulate, I think, because discount stores have just become stores, there actually is room for a little bit more margin than sort of originally believed. The other piece of the business that we haven't talked about at all, but is an interesting piece of Walmart's business and competitive vector to Walmart, is Sam's Clubs, which were started in 1983, I believe. It has been a very successful part of the company, I believe 10%, 15% of revenue of Walmart today. It's been a pretty successful part of the company, but it's losing to Costco.…

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