Walmart gets its bite back

IN THEORY THIS should be a good time to be Walmart, the doyen of American retailers that came of age in the stagflationary era of the 1970s. Inflation is back, yet no one knows better than the Beast of Bentonville how to use the power of the growl to convince suppliers to lower prices. Supply chains are buckling, yet such is Walmart’s heft that it has chartered ships and bypassed rail services to deliver Halloween and Christmas goods early this year. Workers are in short supply, but it managed to add 200,000 jobs to its 2.3m global payroll in the three months to September. “There’s a level of excitement in the air, you can feel it,” enthused Doug McMillon, its chief executive, as Walmart raised its year-end sales and profit targets after solid third-quarter earnings on November 16th.There’s a puzzle, though. Investors are not buying it. In the past year Walmart’s share price has lagged behind not just Amazon, the e-commerce giant, but other big-box American retailers, such as Target and Home Depot. On November 16th its shares fell a further 3%, as investors fretted over what Simeon Gutman of Morgan Stanley described as slightly “squishy” profit margins. Is the stockmarket, so enamoured of all things new, missing the turnaround story of the decade? Or is there something else to worry about, namely the hot breath of Amazon on Walmart’s neck?