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Don't Be Afraid to Buy Wal-Mart
Posted by: tyokunbo (IP Logged)
Date: May 20, 2014 04:02PM
Wal-Mart Stores Inc. (WMT) operates through Wal-Mart U.S., Wal-Mart International and Sam’s Club. It has different kinds of stores and retail websites. The company’s stores offer food products and beverages. Its merchandise also includes stationery, automotive accessory, hardware and others. The company offers financial services and related products, including money orders, prepaid cards, wire transfers, check cashing, and bill payment. As of April 29, 2014, it operates 11,302 stores in 27 countries. It offers e-commerce websites in 10 countries. Founded in 1945, Wal-Mart is headquartered in Bentonville, Ark.
Numbers at a Glance
Wal-Mart has continued to concentrate on driving its growth across its enterprises. It accounts for nearly 10% of non-automotive retail spending in the U.S. In the first quarter of fiscal 2014, the company’s total revenue rose 1% to $114.96 billion. Due to the bad weather, it earned $3.59 billion. That compares with $3.78 billion a year ago. Wal-Mart’s total U.S. revenue rose 2% to $67.85 billion. The company’s international segment increased its sales by 3.4% on a constant currency. For the second quarter, Wal-Mart anticipates earnings from continuing operations in a range of $1.15 to $1.25 per share. Analysts predict earnings of $1.28 per share.
Wal-Mart has acquired 12 e-commerce enterprises over the last three years. However, it is adding more e-commerce and mobile commerce capabilities, such as the purchase of Adchemy in the recent past.
In the first quarter, Wal-Mart brought low prices to the money transfer industry through its unique Walmart-2-Walmart service. It also rolled out Wild Oats. This is a new line of organic food product. In addition, Wal-Mart launched a video game program. These initiatives will help to boost earnings in the coming quarters.
Head to Head
Wal-Mart faces stiff competition from Costco (COST) and Target (TGT) in the varieties stores sector. However, Wal-Mart has an advantage. It is expanding its price leadership in a challenging business environment. Also, the company has continued to innovate and grow.
Wings Across the World
Wal-Mart has its wings in the UK, Brazil, Mexico, China and other countries. The company’s international segment showed more than 5% growth in a constant currency operating income in the first quarter.
In Mexico and Brazil at a Glance
In Mexico, Wal-Mart’s Superama lowered prices on more than 5,000 items. It also put in place a quality guarantee. This was to expand its price leadership in key markets. In Brazil, Wal-Mart kicked off a new advertizing campaign to make people save so they can live in a better way. Apart from boosting its revenue, the initiative is to offset the wage inflation in Brazil.
Wal-Mart’s e-commerce programs continue to experience strong demand in China. Just as in Brazil, Wal-Mart organized its “We Operate for Less” program to offset the country’s wage inflation.
On a Concluding Note
Wal-Mart is making progress in building a more customer-friendly company. It is also investing in different kinds of technology to bring its value proposition to many more customers around the world. The company is well-positioned to meet the challenges of its business. Conclusively, Wal-Mart has a strong financial position and enough room for its international exposure. The company will continue to provide returns for investors in the near term.
Stocks Discussed: WMT, COST, TGT,
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