Walmart says supply chain spending will peak over next two years

Walmart expects capital expenditures tied to its supply chain transformation to peak over the next two years as automation retrofits accelerate across its U.S. network and begin expanding internationally.

President and CEO John Furner told analysts that elevated investment levels this year and next reflect the retailer’s push to modernize distribution infrastructure.

Of Walmart’s 42 regional distribution centers in the U.S., 23 are currently being retrofitted with automation, with plans to eventually upgrade the full network.

CFO John David Rainey said the company is also in early stages of deploying supply chain automation in select international markets.

Automation is already embedded across much of the U.S. footprint. Roughly 60% of Walmart stores receive at least part of their freight from automated distribution centers, and about half of U.S. e-commerce fulfillment center volume is automated, a shift executives say supports lower shipping and labor costs.

Technology-driven productivity gains are central to Walmart’s omnichannel strategy.

In the fourth quarter, global inventory rose 2.6% year over year, roughly half the rate of sales growth, a dynamic Furner described as evidence of tighter inventory management enabled by automation.

The retailer has rolled out robotics in distribution centers and inventory-tracking sensors that generate automated alerts.

In stores, more than one million U.S. associates use handheld devices equipped with computer vision to map inventory in real time, improving stock accuracy and deployability.

Stores are also becoming critical fulfillment nodes. Leveraging proximity to customers, Walmart delivered 35% of store-fulfilled online orders in under three hours during the fourth quarter.

With digital channels expanding and fulfillment increasingly localized, Walmart’s strategy centers on placing inventory closer to consumers while driving down marginal costs through technology, even as near-term capital intensity remains elevated.

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