Jim, Alice and Rob Walton are the big winners of this year’s Walmart stock surge.REUTERS/Rick Wilking
Walmart’s shares are up 58% this year to record highs, making its founding family richer than ever.
The three surviving children of retail legend Sam Walton are each worth more than $100 billion.
Walmart and the Waltons have benefited from a signature strategy and cost pressures on consumers.
Walmart’s shares have soared to record highs, lifting the retailer’s founding family to a new level of prosperity. Experts say the signature strategy fueled the stellar performance, and they’re not surprised to see the Waltons reap the rewards.
Shares of Walmart are up 58% this year to about $83, valuing the company at nearly $670 billion at the end of the day. The stock surge has added more than $32 billion to the fortunes of each of founder Sam Walton’s three surviving children: Jim, Rob and Alice.
The siblings are among the 20 richest people in the world and have a net worth of more than $100 billion, according to the Bloomberg Billionaires Index. Together they are much richer than Elon Musk, who tops the rich list with a net worth of $237 billion.
Walmart generated net sales of $643 billion and operating income of $27 billion last year. The Sam’s Club owner has about 10,500 stores worldwide and employs about 2.1 million people, including nearly 1.6 million in the U.S. — about 1% of the workforce.
The mega-retailer and its largest shareholders owe much of their success to selling everyday products at low prices, David King, the Higdon Professor of Management at Florida State University and co-author of a 2017 case study on Walmart, told Business Insider.
Value for money is top of mind for many shoppers, who have been hit in recent years by higher prices for basic necessities such as food, fuel and housing, and higher monthly payments on their credit cards, car loans, mortgages and other debts. .
Inflation soared to a 40-year high of more than 9% in mid-2022 and remained above the Federal Reserve’s 2% target in September. The central bank tried to curb the pace of price growth by raising interest rates above 5% between March 2022 and July 2023, and only made its first cut in September.
Walmart also benefits from its ubiquity: According to its website, 90% of the U.S. population lives within 10 miles of one of its stores. The retailer has steadily expanded by entering smaller markets that could support only one major retailer — limiting competition — and then using its economies of scale to undercut “mom-and-pop” stores and drive them out of business, King said .
The company has also built a national logistics network to support its growing number of stores and thus increase its purchasing power, allowing it to command increasingly lower prices from suppliers and provide customers with greater value and convenience, King added. He noted that Walmart and its affiliates accounted for 16% of Procter & Gamble’s sales last year.
Art Weinstein, a marketing professor at Nova Southeastern University in Florida who has published academic research on Walmart, attributed its success to similar factors.
He told BI that the stock’s outperformance reflects inflationary pressures and that investors see Walmart as a “safe investment in troubling global markets.”
Weinstein praised Sam Walton’s customer-centric philosophy, plus the company’s low prices, one-stop shopping experience, supply chain expertise, strong supplier partnerships, tremendous scale in grocery retailing and innovations such as the Walmart+ subscription program.
Walmart has enormous purchasing power, which allows it to keep prices low.Alexanderstock23/Shutterstock
Sam Walton cleverly structured his fledgling company as a family partnership in 1953, giving each of his four children 20% of the shares. Put another way, he gave 80% of Walmart to his children when it was worth next to nothing, saving them from having to pay billions of dollars in estate taxes to inherit his stock after his death in 1992.
King told BI he wasn’t surprised to see the Waltons at the top of a rich list dominated by tech bosses like Musk, Jeff Bezos and Mark Zuckerberg.
“Walmart is a family-owned business that is in its second generation, or the initial value created by Sam Walton has not been divided among multiple heirs,” King said.
The son of the late John T. Walton, Lukas Walton, ranks in the top 50 of the Bloomberg wealth index with a fortune of nearly $37 billion. But it is true that the vast majority of the family fortune remains in the hands of Sam Walton’s children.
“Wealth rarely extends beyond the grandchildren or three generations because the number of heirs increases in the third generation and they are used to living richly,” King said.
The management professor added that the Waltons have retained more of the company over the years because Walmart, unlike many tech companies, has largely self-funded its scale.
“Wealth is more concentrated because Walmart relied primarily on internal growth that financed its expansion through revenues,” he said. “Tech billionaires, on the other hand, are more dependent on outside investors to scale, giving investors more ownership than founders.”
Weinstein, the marketing professor, also told BI that he was not surprised to see the Waltons in the $100 billion club, as the U.S. stock market rewards strong corporate performance.
Tech companies and founders “tend to be the most high-profile wealth creators, because it’s easier to scale online businesses that take advantage of the network effect, and tech companies can be seen as sexier, more interesting and revolutionary,” he said, describing Musk’s empire of companies, including Tesla and SpaceX as an example.
“Walmart’s success largely follows a different path by really mastering the day-to-day business fundamentals,” Weinstein added.
Still, he has ticked off several threats against Walmart. It faces competition from local rivals such as Amazon and Target, as well as Chinese newcomers such as Temu and Shein.
The company could struggle to find talent when it is already the largest employer in the US, and it could be difficult to bring in good managers if top graduates prefer management consulting and tech gigs. The long hours and weekend shifts in retail are also a “turnoff for many excellent employees,” he says.
“One potential concern is that Walmart is attracting older customers,” he added. “Will their products and stores appeal to millennials and Gen Z shoppers in the future?”
