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Jul 26, 2022

World's richest family loses US$11.4B in Walmart rout

Walmart cuts profit outlook for Q2 and 2023


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The Walton family fortune fell US$11.4 billion on Tuesday after Walmart Inc. slashed its earnings outlook for the second time this year.

Shares of the Bentonville, Arkansas-based retailer, which is controlled by the family, tumbled 7.6 per cent in New York trading after it said adjusted earnings per share will decline as much as 13 per cent this year with US shoppers reining in spending on big-ticket items amid soaring consumer prices. Two months ago, the company said earnings per share would only dip about 1 per cent, while in February, it had predicted a modest increase.

The family’s late patriarch, Sam Walton, built the business around a discount culture that has in the past helped buoy its stock during recessionary times. In revising its outlook, Walmart cited the cost of reducing merchandise stockpiles that customers were increasingly reluctant to buy as inflation hits a four-decade high.

Walton’s three surviving children, Alice, Jim and Rob, daughter-in-law Christy and Christy’s son, Lukas, own just under half of the retailer. That gives them a combined net worth of about US$199.3 billion, according to the Bloomberg Billionaires Index, down almost 11 per cent since the first of the year.

Walmart wasn’t the only retailer to see its shares tumble. Canadian e-commerce firm Shopify Inc. fell 14 per cent Tuesday after Chief Executive Officer Tobi Lutke acknowledged the company’s decision to expand rapidly coming out of the COVID-19 pandemic didn’t pay off. As a result, the firm said it planned to cut about 10 per cent of its workforce.

Tuesday’s decline shaved US$383 million from Lutke’s net worth, dropping the 41-year-old co-founder’s fortune to about US$3.1 billion, according to the Bloomberg index. Ottawa-based Shopify’s shares have plunged 77 per cent this year.

The Walton family, which owns its Walmart stake through various trusts, has stepped up its stock sales in recent years. They unloaded US$6.2 billion in shares last year, which the company has said is part of a strategy to keep the family’s stake under 50 per cent amid buybacks.

Those sales, along with outside investments in US stocks and low-cost exchange-traded funds, has armed them with ample funds for acquisitions. A group led by Rob Walton agreed to buy the NFL’s Denver Broncos for a record US$4.65 billion. The deal, announced in June, still needs approval from the National Football League’s finance committee and league ownership.