Why Walmart stock keeps hitting new highs, making the Waltons richer than ever

• Walmart stock has soared 58% this year to record highs, making its founding family richer than ever.
• Retail legend Sam Walton's three surviving children are each worth more than $100 billion.
• Walmart and the Waltons have benefited from a signature strategy and cost pressures on consumers.

Walmart stock has soared to record highs, lifting the retailer's founding family to new levels of wealth. Experts say its signature strategy has fueled the stellar run, and they're not surprised to see the Waltons reap the rewards.

Shares of Walmart have jumped 58% this year to about $83, valuing the company at nearly $670 billion at Wednesday's close. The stock surge has added more than $32 billion to the fortunes of each of founder Sam Walton's three surviving children — Jim, Rob, and Alice.

The siblings rank among the world's 20 wealthiest people and have net worths in excess of $100 billion, per the Bloomberg Billionaires Index. Together they're far richer than Elon Musk, who tops the rich list with a $237 billion net worth.

Walmart generated $643 billion in net sales and $27 billion in operating income last year. The Sam's Club owner has about 10,500 stores worldwide and employs around 2.1 million people, including almost 1.6 million in the US — roughly 1% of the workforce.

The megaretailer and its biggest shareholders owe much of their success to selling everyday products at low prices, David King, the Higdon Professor of Management at Florida State University and the coauthor of a 2017 case study on Walmart, told Business Insider.

Value for money is top of mind for many shoppers, who've been hit in recent years by higher prices for basics such as food, fuel, and housing, and higher monthly payments on their credit cards, car loans, mortgages, and other debts.

Inflation skyrocketed to a 40-year high of more than 9% in mid-2022 and remained above the Federal Reserve's 2% target in September. The central bank sought to curb the pace of price growth by raising interest rates to above 5% between March 2022 and July 2023, and only made its first cut this September.

Logistics network

Walmart also benefits from ubiquity, with 90% of the US population living within 10 miles of one of its stores, according to its website. The retailer has steadily expanded by entering smaller markets that could only support one large retailer — limiting competition — then using its scale economies to undercut mom-and-pop stores and drive them out of business, King said.

The company has also built a national logistics network to support its growing store count and thus bolster its purchasing power, enabling it to negotiate ever-lower prices from suppliers and offer greater value and convenience to customers, King added. He noted that Walmart and its associated businesses accounted for 16% of Procter & Gamble's sales last year.

Art Weinstein, a marketing professor at Nova Southeastern University in Florida who's published academic research on Walmart, attributed its success to similar factors.

He told BI the stock's outperformance reflects inflationary pressures and investors perceiving Walmart as a "safe investment in troubling world markets."

Weinstein credited Sam Walton's philosophy of centering the customer plus the company's low prices, one-stop shopping experience, supply chain expertise, strong partnerships with suppliers, vast scale in grocery retailing, and innovations such as the Walmart+ subscription program.

Family fortunes

Sam Walton shrewdly structured his fledgling company as a family partnership in 1953, giving 20% stakes to each of his four children. Put differently, he handed 80% of Walmart to his kids when it was worth next to nothing, sparing them from paying billions of dollars in estate taxes to inherit his stock after he died in 1992.

King told BI he wasn't surprised to see the Waltons near the top of a rich list dominated by technology bosses like Musk, Jeff Bezos, and Mark Zuckerberg.

"Walmart is a family firm that is in its second generation, or the initial value created by Sam Walton has not been split across multiple heirs," King said.

The late John T. Walton's son, Lukas Walton, ranks in the top 50 of Bloomberg's wealth index with a nearly $37 billion fortune. But it's true the vast majority of the family fortune remains in the hands of Sam Walton's children.

"Wealth rarely lasts past the grandchildren or three generations, as the number of heirs in the third generation increases and they are used to living wealthy," King said.

The management professor added that the Waltons have retained more of the company over the years because Walmart, unlike many tech companies, has largely self-financed its scaling.

"The wealth is more concentrated, because Walmart used mostly internal growth that funded expansion from revenues," he said. "In contrast, tech billionaires are more dependent on external investors to scale up, giving more ownership to investors, versus founders."

$100 billion club

Weinstein, the marketing professor, also told BI he wasn't surprised to see the Waltons in the $100 billion club, as the US stock market rewards strong business performance.

Tech firms and founders are "generally the most high-profile wealth creators as it is easier to scale online companies which benefit from the network effect, and tech firms may be perceived as sexier, more interesting, and revolutionary," he said, giving Musk's empire of businesses including Tesla and SpaceX as an example.

"Walmart's success takes largely a different path by truly mastering the daily business fundamentals," Weinstein added.

Yet he ticked off several threats to Walmart. It faces competition from local rivals like Amazon and Target, as well as Chinese upstarts such as Temu and Shein.

The company might struggle to find talent when it's already the largest employer in the US, and bagging great executives could be tough when top graduates tend to prefer management consulting and tech gigs. Retail's long working days and weekend shifts are also a "turn-off for many excellent employees," he said.

"One potential concern is that Walmart attracts older customers," he added. "Will their products and stores appeal to millennial and Gen Z shoppers going forward?"