Walton Family Loses $6 Billion After Poor Walmart Earnings

By Douglas A. McIntyre Published Feb 21, 9:15AM EST

Quick Read

A weak forecast weighed on Walmart Inc. (NYSE WMT) shares.
The founder’s three richest children each lost over $6 billion on the news.

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Walton Family Loses $6 Billion After Poor Walmart Earnings — © oe Raedle / Getty Images News via Getty Images

Walmart Inc. (NYSE: WMT | WMT Price Prediction) earnings for the most recently reported quarter were fine. Its forecast for its fiscal year and the current quarter were weak, and the share price dropped almost 7%. That wiped out about $40 billion of its market cap.

Last quarter, Walmart revenue rose 4% to $178.9 billion, but per-share earnings dropped 4% to $0.65. Each figure was better than expected. However, the full-year forecast was for a 3% to 4% improvement at the top line. Management wrote, “Additionally, the Company’s guidance assumes a generally stable consumer and continued pressure from its mix of products and formats globally.” In other words, next year could be a tough one. “Wallets are still stretched,” CFO John David Rainey pointed out.

Each of founder Sam Walton’s three richest children lost over $6 billion yesterday on the news. Yet, according to the Bloomberg Billionaire Index, Jim, Robert, and Alice Walton are still worth about $119 billion each. The family still owns 45% of Walmart’s stock.

Sam Walton, who died in 1992, started Walmart in 1962. Today, it has over 10,000 locations worldwide and employs 2.1 million people. It is the largest employer in the United States, with 1.2 million workers, and America’s largest company based on revenue. Last year, the global revenue total was $650 billion.

The company claims that in the United States, where it has over 4,000 stores, 90% of the population lives within 10 miles of a Walmart location.

Walmart’s shares have been good to the family. They are up 145% in the past five years and 66% in the past year. Its current market cap is $785 billion.

Interestingly, Amazon.com Inc. (NASDAQ: AMZN) was supposed to put Walmart out of business. Two decades ago, many people viewed e-commerce as superior to brick-and-mortar retail. Amazon received the blame for the demise of Sears, Kmart, and J.C. Penney.

Walmart used its size, created its own e-commerce business, and built a model where people can order online and pick up at stores to compete with Amazon. (Amazon’s shares are up only 33% in the past year.)

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.