Dive Brief:

• Walmart's inventory was up 16% YoY in its first quarter as the company tries to keep up with high sales levels and avoid the out-of-stocks that plagued the retailer last year, executives said on the company's earnings call Tuesday.
• The retailer is navigating multiple delays in the supply chain, specifically noting port delays, by extending lead times for orders, CFO Brett Biggs said Tuesday.
• "Our inventory level is up, which is a good thing," President and CEO of Walmart U.S. ​John Furner said. "Last year we had big stock-outs in grocery and in general merchandise, so I feel much better about our inventory position."

Dive Insight:

Walmart is dealing with the same supply chain challenges that many other big-box retailers also face: high demand for products, tight transport capacity and delays on just about every freight mode.

When the pandemic first hit, lead times were up more than 200% around the world. Walmart has added extra lead time to account for supply chain delays.

Walmart is also still getting accustomed to increased e-commerce, which has required changes to its in-store operations, executives said.

The retailer manages an omnichannel network with multiple fulfillment options, allowing it to move inventory between different pieces of its infrastructure depending on what is in an order.

"You've got changes in the stores, where we're shifting more of our stocking to overnight, so we can free up more capacity during the day for things like picking," Furner said, referring to the task of picking customer orders.

Walmart's e-commerce sales were up 37% for the quarter. But the retailer did not break out the percentage fulfilled by stores versus its distribution and fulfillment network.

"Stores are acting as stores, they act as pickup centers and in some cases fulfillment centers," Furner said. "We have fulfillment centers acting as fulfillment centers, which go direct to home, and at times they ship to a store so ... the inventory can be consolidated with an order and then put into our last-mile network."

Furner said Walmart has been testing its own last-mile delivery vans in Arkansas. He did not provide any more details on this pilot, but taking ownership of last-mile delivery has been of increasing interest for retailers.

Amazon did so with a fleet of contractors driving Amazon-branded vans, while Target's same-day delivery is offered through Shipt.