Investors waiting for Walmart (WMT -1.75%) to return to profit growth will have to keep waiting. That was one of the messages at Walmart's annual investor conference.

Following its $16 billion acquisition of a majority stake in Flipkart, the fast-growing Indian e-commerce company, Walmart trimmed its earnings guidance for this year and next. For the current year, or fiscal 2019, the retail giant now sees adjusted earnings per share of $4.65 to $4.80, down from a previous forecast of $4.90-$5.05. For fiscal 2020, the company expects earnings per share to decline by low single digits. Excluding Flipkart, EPS is expected grow by low-to-mid single digits.

Elsewhere, CFO Brett Biggs said that he expected the company's e-commerce loss to widen next year even as it forecast 35% growth in U.S. online sales, a further sign that profit growth remained elusive.  A lack of profit growth isn't anything new for the company. Walmart's annual earnings per share peaked in fiscal 2013, nearly six years ago, at $5.01, and the company won't top that mark until at least fiscal 2021, based on the latest forecast.

Walmart CEO Doug McMillon surrounded by employees.

CEO Doug McMillon with other Walmart employees. Image source: Walmart.

A new Walmart

CEO Doug McMillon took over the company in 2014, and has dramatically changed its trajectory. He's scaled back on new store openings, focusing instead on improving the company's current store base with investments like more staff training and increased wages and an emphasis on faster checkout lines and fewer out-of-stock items. McMillon also redirected the company's attention to e-commerce with the acquistions of and Flipkart as well as smaller brands like Bonobos, Modcloth, and Moosejaw, and has rapidly expanded the chain's online grocery pickup and delivery capabilities, including free two-day shipping with a $35 minimum.

At the investor conference McMillon continued to bang the same drum. He told the audience, "I want to challenge your thinking about Walmart. We are getting to reimagine retail and our business ... Expect us to test a lot and fail sometimes." With his emphasis on experimentation and failure, McMillon seemed to be channeling rival Amazon's(AMZN 1.30%) CEO Jeff Bezos, who is famous for focusing on the long term and being willing to experiment and fail.

Indeed, with the help of Marc Lore, the founder who now runs Walmart's domestic e-commerce division, the company is experimenting in a number of areas. It's launched pickup towers, which allow customers to easily pick up orders in store; it's testing a program to have employees deliver online orders on their way home; and the company has introduced shelf-scanning robots to scan inventory.

McMillon contrasted the new Walmart with the old, saying:

Looking back, we had a proven model and we naturally focused on execution. As the numbers grew, we worked on optimization and unintentionally became risk averse. After all, a small mistake multiplied by a lot of transactions or stores is a big number. But today, we're getting to reimagine retail and our business. To do that, we take risks, try quite a few things, and learn from our failures. That type of behavior is in our DNA and we're waking up that part of our original culture.

What it means for investors 

McMillon has learned from the competition and the market. As recently as 2014, Amazon was still posting quarterly losses, but investors nevertheless extended the e-commerce giant the benefit of the doubt. Earlier this year that company's market cap passed $1 trillion, leaving Walmart far behind. Amazon's triumph shows that profit growth isn't necessary to win the confidence of the market, especially when competitive advantages are evident.

Thus far the market's response to Walmart's long game has been mixed. Investors are still skeptical that Walmart can challenge Amazon in e-commerce, evidenced by the sell-off of Walmart stock in February when U.S. e-commerce growth slowed to 23% in the fourth quarter. Investors feared that Walmart's previous boom in online sales was coming to an end, though the company's e-commerce performance has bounced back since then.

It's clear now that Walmart's #1 objective isn't profit growth, but positioning itself for the future and building a stronger network of competitive advantages. CFO Brett Biggs summed up the company's current strategy, saying, "We continue to prioritize comp sales and e-commerce sales over new stores."

Investors, therefore, should expect profits to creep higher as they have for much of Walmart's history, but that means that share price appreciation won't come easily. However, the market ultimately applauded the guidance and presentation, sending the stock up 2.1% on the day despite some pre-market losses. That's a sign that if Walmart delivers in other areas like comparable sales and e-commerce growth, the stock will move higher -- even if profits stagnate.

McMillon's making the right moves to strengthen the company for the future. The Flipkart deal, for example, will weigh on the company's bottom line in the near term, but it ultimately positions Walmart to be a leader in a huge growth market. 

Playing the long game means that Walmart's investors will have to be patient for a payoff, but dubious investors should look back at Walmart's track record under McMillon. There's little doubt that the company is in a better position than it was five years ago.