24/7 Wall St. Insights
- The Chinese consumer economy is in trouble, which could mean headwinds for Walmart Inc. (NYSE: WMT).
- Also: Dividend legends to hold forever.
Walmart Inc. (NYSE: WMT) has 365 stores in China out of its 10,500 worldwide. China is a key market, even with a small footprint in the world’s largest nation by population. According to Bloomberg, its growth rate makes it a market leader. However, the Chinese consumer economy is in trouble, which could mean headwinds for Walmart.
According to CNBC, national retail sales rose only 2.1% in China in the most recent quarter, which is unusually slow. The world’s most booming economy has suffered from a tough real estate market and a drop in exports. Industrial production is down.
Walmart’s latest earnings report shows that its international division grew 8.3% to $29.9 billion. China and Mexico were listed as critical markets. Global revenue rose 5% to $169.3 billion.
Walmart seems close to being on track with its ambitious China plans announced in 2019. Those plans were to have 500 stores by the end of 2023. It has not quite gotten there. At the core of its plan was success in the grocery segment, which has been among the most critical aspects of its U.S. growth.
From Ford to Starbucks, China was supposed to be the future of global growth for American companies. Its population is three times that of the United States. Its middle class has been growing for over a decade, and some have developed a habit of buying American goods and services.
If China’s economy slows, so does the consumer sector of one of its cornerstone regions.
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