WILMINGTON, Mass. - Symbotic Inc. (NASDAQ:SYM), a pioneer in artificial intelligence and robotics for supply chains, has solidified a deal with retail giant Walmart (NYSE:NYSE:WMT), a $733.77 billion market cap company and prominent player in Consumer Staples, to automate its Accelerated Pickup and Delivery centers (APDs). According to InvestingPro analysis, Walmart is currently trading above its Fair Value, reflecting strong investor confidence in its digital transformation initiatives. The contract, which aims to streamline Walmart's e-commerce fulfillment, could add over $5 billion to Symbotic's future backlog.
Under the agreement, Symbotic will be responsible for developing and deploying advanced automation solutions at several Walmart stores, enhancing the retailer's online pickup and delivery services. Walmart has committed to implementing this technology in 400 of its APDs over the coming years, with an option to expand to more locations.
The partnership is set to bolster Walmart's ability to meet the increasing demand for e-commerce, leveraging its vast network of over 4,600 stores, which are within 10 miles of 90% of the U.S. population. With annual revenue reaching $673.82 billion and a robust 71.35% stock return over the past year, Walmart's digital transformation strategy appears to be paying off. This proximity has already contributed to a nearly 50% year-over-year growth in store-fulfilled deliveries, with Walmart reporting a monthly run rate surpassing $2.5 billion as of October 31, 2024.
The transaction, expected to close in Symbotic's fiscal second quarter of 2025, includes a $200 million cash payment at closing, with up to $350 million in additional contingent consideration based on the number of APD systems ordered. Walmart will also fund a development program with an initial payment of $520 million, including $230 million at closing.
Rick Cohen, Chairman and CEO of Symbotic, highlighted the strategic nature of the acquisition, emphasizing the expansion of their product offerings into e-commerce settings for last-mile delivery. Greg Cathey, Senior Vice President of Transformation and Innovation at Walmart, expressed enthusiasm for the enhanced customer service and accelerated pickup and delivery capabilities that the collaboration with Symbotic is anticipated to deliver.
This development is a continuation of Symbotic and Walmart's relationship, which began in 2017 with the automation of Walmart's regional distribution centers across the U.S. The new initiative is set to expand Symbotic's market by more than $300 billion in the United States alone, marking a significant milestone in the company's growth. For detailed analysis of Walmart's financial health (rated GOOD by InvestingPro) and over 30 additional key metrics, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
The information for this article is based on a press release statement from Symbotic Inc.
In other recent news, Walmart Inc. has been making strides with significant developments. The company reported a revenue of $674 billion in the last twelve months, marking a steady growth rate of 5.48%. Analyst Oliver Chen from TD Cowen highlighted Walmart's impressive performance and maintained a Buy rating for the company. Walmart's marketplace initiatives and Walmart+ offerings have been instrumental in attracting and retaining customers, contributing to the company's growth.
Recently, Walmart GoLocal, the company's delivery service, partnered with IBM (NYSE:IBM) to improve last-mile delivery for retailers. This collaboration integrates Walmart GoLocal into IBM's Sterling Order Management system to streamline delivery processes. Furthermore, Walmart unveiled a refreshed brand identity, signaling a transformation into a digital-first, omnichannel retailer.
In other developments, Piper Sandler upgraded Walmart's stock based on a positive sales outlook for 2025. The firm expects consumers to accelerate purchases of big-ticket household items due to anticipated price increases from tariffs. However, Walmart and its fintech partner, Branch Messenger Inc., face a lawsuit from the Consumer Financial Protection Bureau for allegedly opening costly bank accounts for delivery drivers without consent.
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