Buffett Just Dropped Walmart and Signalled the Death of Retail
Business Insider: Warren Buffett’s Berkshire Hathaway just sold off $900 million of Walmartstock,choosingtoinvest billions in airline stocks instead.
The sale, which leaves Buffett with nearly no shares in Walmart, comes as America’s largest traditional retailer has been rushing to catch up to Amazon and other online competitors. Amazon’s market value is now $356 billion, compared with Walmart’s $298 billion. Buffett last year acknowledged that traditional brick-and-mortar retailers were struggling in the face of competition from the e-commerce giant.
“It is a big, big force and it has already disrupted plenty of people and it will disrupt more,” Buffett said at his annual shareholders’ meeting in 2016, according to Bloomberg. Buffet’s been paring his stake in Walmart since then. He first bought shares in the retailer back in 2005.
The 86-year-old billionaire also noted that Amazon’s competitors, “including us in a few areas, have not figured the way to either participate in it, or to counter it.” Former Walmart CEO Mike Duke admitted in 2012 that his biggest regret as CEO was not investing more in e-commerce to better compete with Amazon. “I wish we had moved f a s t e r. We’ve proven ourselves to be successful in many areas, and I simply wonder why we didn’t move more quickly. This is especially true for e-commerce,” Duke said at the time. “Right now we’re mak- ing tremendous progress, and the business is moving, but we should have moved faster to expand this area.” Walmart’s online sales were $13.7 billion in 2015 , compared to Amazon’s $107 billion.
Buffett’s retail instincts have proven correct before when he correctly predicted the downfall of Sears and Kmart in 2005.
“Retailing is like shooting at a moving target,” Buffett said. “Turning around a retailer that has been slipping for a long time would be very diff i c u l t . Ca n yo u think of an example of a retailer that was successfully turned around?”
Since the end of 2014, Walmart shares have fallen 21%, compared with a 119% jump in Amazon