Walmart will buy Vizio for $2.3 billion. This comes after surpassing sales expectations and announcing the largest dividend increase in over ten years.
The largest retailer in the world increased its dividends by 9 percent to 83 cents per share, marking its 51st consecutive year of dividend increases.
Walmart’s revenue in the three months ending January increased by 5.7% to $173.4 billion. People choose to shop at Walmart because it offers the best value during the Christmas season.
Walmart announced its agreement to purchase Vizio at $11.50 per share along with its fourth quarter trading statement. Walmart’s latest acquisition was founded in 2002 and designs, sells, and creates advertising for televisions, sound bars, and other electronic devices.
Walmart, through its Sam’s Club warehouses, has been a major seller of Vizio products for years. However the retailer stated that purchasing the company will boost its advertising business. Walmart is looking to expand its advertising business because it has higher profit margins compared to selling groceries and clothing. Walmart’s global advertising sales grew 33 percent in the fourth-quarter. John Rainey, Walmart’s chief financial officer, called the acquisition an “accelerator” for “the high-margin and fast-growing parts of our business”.
Walmart’s control over the Vizio platform will give companies who advertise with Walmart a larger reach, the company said. SmartCast is Vizio’s smart TV system. It has 18,000,000 active accounts. The retailer said it would be able to offer “innovative TV and in-home media experiences” as a result.
Walmart shares rose by 3.3 percent, or $5.56 to close at $175.92. Vizio stock rose by 16.2 percent, or $1.55. It closed at $111.07.
Walmart was founded by Sam Walton in 1962 and is headquartered in Bentonville in Arkansas. The company has approximately 10,500 stores, 2.1 million employees and a market capitalization of $474 billion. Although the United States is its largest market, it has a vast global network, with 5,100 stores and approximately 550,000 employees spread across nearly 20 countries including Canada, India, and China. It is often regarded as a barometer for the retail sector which caters to budget-conscious consumers.
Rainey, 53 said that customers are shopping more often but putting less in their baskets. He said that computers, televisions and other expensive items were more difficult to sell.
Walmart’s net profit fell to $5.49bn during this period. This compares with $6.28bn in the same month the previous year.
Walmart’s CEO, Doug McMillon, said in November that the company might face a period of deflation, with prices stabilizing or even decreasing.Doug McMillon, 57, Walmart’s chief executive said that the company could soon face a deflationary environment where prices were not only stabilising but going down.
Rainey stated that, “the overall possibility [of deflation] remains but prices are more stabilized than they were three month ago”.