By Tonya Garcia, MarketWatch
Walmart Inc. is saving big bucks on an unexpected part of the business: shopping bags.
The world’s largest company by revenue expects to save $60 million annually on plastic shopping bags, “just by changing our buying process and better utilizing our scale,” Chief Financial Officer Brett Biggs said.
The remarks were made after the retail giant announced its fourth-quarter earnings on Tuesday. The earnings announcement also fell on the same day as the company’s investment community event.
Biggs also said the company is saving 15% on the cost of vests worn by sales staff, which are made with recyclable materials. Biggs said the vests are “more comfortable and more sustainable.”
This isn’t the first time Walmart /zigman2/quotes/207374728/composite WMT +1.81% has announced savings from a random corner of the business. Back in October 2018, the company said it would save $20 million annually by switching to a new floor wax that was cheaper and made it possible to buff the floors fewer times.
While Walmart is anticipating big savings on shopping bags and associate uniforms, the impact of the coronavirus is still to be determined.
Biggs said the company anticipates a “couple of cents negative impact” in the first quarter from the coronavirus outbreak. The impact of the outbreak wasn’t included in Walmart’s fiscal 2021 outlook.
Walmart is guiding for earnings per share of $5.00 to $5.15, up 1.5% to 4.5% from fiscal 2020 adjusted EPS, e-commerce growth of around 30% and Walmart U.S. same-store sales growth of at least 2.5%, excluding fuel.
The FactSet consensus is for EPS of $5.21 and domestic same-store sales growth of 3%.
Fourth-quarter earnings and revenue fell short, which Chief Executive Doug McMillon attributed to a variety of factors, including the shortened holiday shopping season, the shift to e-commerce and the lack of a hot toy.
Walmart raised its dividend by 2%.
“Walmart’s Q4 performance, which we characterize as tepid overall, indicates that the holiday season was if anything even more promotional than we anticipated, with its U.S. operating margin down around 75 basis points for the quarter, some of which was due to mix as lower margin food sales were strong while higher margin apparel was weak, some due to softness in key holiday categories such as toys, and some due to increased expenses around delivery,” said Charlie O’Shea, Moody’s lead Walmart analyst.