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Wal-Mart Stores Inc (NYSE:WMT)
Gross Margin
24.47% (As of Jan. 2014)

Gross Margin is calculated as gross profit divided by its revenue. Wal-Mart Stores Inc's gross profit for the three months ended in Jan. 2014 was $31,735 Mil. Wal-Mart Stores Inc's revenue for the three months ended in Jan. 2014 was $129,706 Mil. Therefore, Wal-Mart Stores Inc's Gross Margin for the quarter that ended in Jan. 2014 was 24.47%.

WMT' s 10-Year Gross Margin Range
Min: 21.75   Max: 25.4
Current: 24.82

21.75
25.4

During the past 13 years, the highest Gross Margin of Wal-Mart Stores Inc was 25.40%. The lowest was 21.75%. And the median was 23.45%.

WMT's Gross Marginis ranked lower than
100% of the Companies
in the Global Discount Stores industry.

( Industry Median: vs. WMT: 24.82 )

Wal-Mart Stores Inc had a gross margin of 24.47% for the quarter that ended in Jan. 2014 => Competition eroding margins

The 3-Year average Growth Rate of Gross Margin for Wal-Mart Stores Inc was -0.20% per year.


Definition

Gross Margin is the percentage of Gross Profit out of sales or Revenue.

Wal-Mart Stores Inc's Gross Margin for the fiscal year that ended in Jan. 2014 is calculated as

Gross Margin (A: Jan. 2014 )=Gross Profit (A: Jan. 2014 ) / Revenue (A: Jan. 2014 )
=118225 / 476294
=(Revenue - Cost of Goods Sold) / Revenue
=(476294 - 358069) / 476294
=24.82 %

Wal-Mart Stores Inc's Gross Margin for the quarter that ended in Jan. 2014 is calculated as

Gross Margin (Q: Jan. 2014 )=Gross Profit (Q: Jan. 2014 ) / Revenue (Q: Jan. 2014 )
=31735 / 129706
=(Revenue - Cost of Goods Sold) / Revenue
=(129706 - 97971) / 129706
=24.47 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.


Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

Wal-Mart Stores Inc had a gross margin of 24.47% for the quarter that ended in Jan. 2014 => Competition eroding margins


Be Aware

If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin and Operating Margin closely helps avoid value trap situations.


Related Terms

Operating Margin, Cost of Goods Sold, Gross Profit, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Wal-Mart Stores Inc Annual Data

Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14
Gross Margin 23.7323.8624.2224.3424.8125.4025.3425.0224.8324.82

Wal-Mart Stores Inc Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
Gross Margin 25.0724.8324.6325.0624.8924.8124.6625.2225.0724.47
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