Buf­fett Just Dropped Wal­mart and Sig­nalled the Death of Re­tail

The Economic Times - - Companies: Pursuit Of Profit -

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

Photo: AFP

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