Dear oh dear, why does Bloomberg allow this nonsense?

Wal-Mart has 2.2 million employees, including 1.3 million hourly workers. It employs 1.2 million people in the U.S. alone. Gross revenue is $475 billion, generating profits of $17.20 billion. It dominates the discount retail space, and according to Bloomberg, has a 66.70 percent market share.

The size of Wal-Mart is sometimes difficult to visualize. To put it into some context, consider the following: 100 million U.S. shoppers patronize Wal-Mart stores every week. Wal-Mart has twice the number employees of the U.S. Postal Service, a larger global computer network than the Pentagon, and the world’s largest fleet of trucks. Americans spend about $36 million dollars per hour at the stores. Wal-Mart now sells more food than any other company in the world, capturing one of every four dollars spent on food in the U.S. The average American family of four spends over $4,000 a year there. Each week, it has 200 million customers at more than 10,400 stores in 27 countries. If the company were an independent country, it would be the 25th largest economy in the world.

Sigh. Ritholtz is comparing the GDP of a country to the turnover of a company. Which ain’t right as any fule kno.GDP is value added, not turnover.

13 comments on “Dear oh dear, why does Bloomberg allow this nonsense?

  1. Hmmm, but doesn’t its turnover represent (mostly) value added to the customer? Value added by the customer buying the stuff (rather than the value added by Walmart getting it to them?) I mean particularly with food, at least with the first and cheapest food you buy the added value is pretty much 100% of the dollars you spend on it, isn’t it?

    If you look at it like that I’m not sure the comparison is completely meaningless. Not that it helps us to understand the world any better either. Either way, walmart is one huge and extremely powerful company.

  2. Profits plus wages paid is a better measure of the “GDP” of a company. An easier way to estimate it is to deduct cost of sales from turnover which isn’t correct but will get you into the ballpark.

    Walmart is indeed big but there’s no way it’s the size of Belgium (25th economy).

  3. Erm, they have 66% market share but sell only 25% of food sold?
    Do they really own their own trucks? Seems a bit capital wasteful for a public company.

  4. On physical size, it seems to be somewhere between Andorra and the Isle of Man – 194th largest (about 40 square miles of retail space, plus allegedly 170 sq mil of car park).

    On population, 2.2 million would put it 142nd, between Jamaica and Namibia.

  5. BiF, they do seem to own most of their trucks. From the accounts, they have £155bn (cost value) of owned assets and only £6bn under capital lease.

    Of that £155bn, £2.6bn is “transportation equipment”. That’s plenty enough to cover their fleet of 7,000 trucks.

    Of course there may be some odd Yankee definitions that allow them to treat certain leases assets as owned, but the separate category of “capital leases” suggests otherwise.

    I guess Walmart has a lower cost of capital than truck leasing companies, so it’s cheaper for them to buy.

    http://www.walmartstores.com/sites/annual-report/2012/WalMart_Financials.pdf

  6. “Do they really own their own trucks? Seems a bit capital wasteful for a public company.”
    Depends what you think a supermarket chain is. There’s a good argument the core business is logistics. It’s certainly where supermarkets get their market edge. So why wouldn’t a logistics company own logistics?

  7. Presumably they allow it because they want the page clicks. They want you or someone else to write something pointing out how stupid that claim is and in no time, you’re off and the eye balls are firmly fixed to the flame-fest. They should beg Ritchie to write every day.

    It is not as troll-like as the Daily Mail or Salon but I bet it works.

    Meanwhile, Stanford University finds what we all know – passive smoking is a myth and not even remotely harmful.

    http://jnci.oxfordjournals.org/content/early/2013/12/05/jnci.djt365.extract

  8. @ SMFS
    Thanks for the link, which I can use to replace my standard comment that one of my friends, an actuary who had looked at and understood the data, said that “passive smoking” was filed under “p” for phlostigon – which only works if the listener has heard of phlostigon
    However, the study found no evidence that it was harmful, which is not the same as proving that it is not. Statistics cannot prove anything, (they can, very occasionally disprove something) but mostly they say this is very likely, or very unlikely to be true or we don’t have enough evidence (the last should be most frequent but people are much more likely to do statistical tests where they expect/want to get a definite answer).
    Lecture completed.
    Of course passive smoking is a myth – we could not measure the ill-effects of active smoking without comparing smokers and non-smokers in otherwise identical circumstances, which means the non-smokers are – allegedly – “passive smokers”.

  9. john77 – though it is possible to compare groups of nonsmokers with different levels of exposure to smoke (eg whether they shared a home or workplace with smokers) so it isnt as straightforward as “passive smoker” and “nonsmoker” being synonyms.

  10. BiS you are spot on, Walmart is more a distribution network and less a shop. Its can sell cheaper because it has a fantastically efficient distribution network. Its why it has expanded at the rate that it has done which is not that fast compared to other companies.

    The new stores only open when the distribution network has grown to cover the area. Its why their physical growth has been at a relatively slow pace but is utterly relentless. The distribution model minimises storage costs. Interestingly they also focus on details like getting suppliers to reduce unnecessary packaging as that reduces weight and allows for lower transport costs per item etc etc.

    The company most similar to Walmart is really Amazon which again is about distribution and logistics.

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