How is Wal-Mart Stores doing financially?
I'm trying to do a financial analysis on Wal-Mart Stores. So, I need to know if they are doing good or bad and their strengths and weaknesses. i need to know if the company is well managed; growing, and are sales increasing or decreasing.
- JFADLv 51 decade agoBest Answer
The company Sam built has become the world's number one retailer. Diversification into grocery (Wal-Mart Supercenters and Neighborhood Markets), international operations and membership warehouse clubs (SAM'S CLUBS), has created greater opportunities for growth. But unlike some corporations whose financial growth does not translate into more jobs, Wal-Mart's phenomenal growth has been an engine for making jobs.
As of November 30, 2006, the Company had 1,092 Wal-Mart discount stores, 2,195 Supercenters, 576 Sam’s Clubs and 110 Neighborhood Markets in the United States. Internationally, the Company operated units in Argentina (13), Brazil (301), Canada (282), China (68), Costa Rica (136), Guatemala (127), Honduras (39), Japan (391), Mexico (874), Nicaragua (38), Puerto Rico (54), El Salvador (60) and the United Kingdom (335).
Hoover's offers Wal-Mart Stores, Inc. information and related Discount & Variety Retail facts online:
Back in the 2004 10-K for Wal-Mart Stores Inc., Wal-Mart management introduced a section called Company Performance Measures (in the MD&A portion of the filing). Wal-Mart management wished to use this section to evaluate Wal-Mart’s annual performance for the year.
The four metrics that Wal-Mart listed (along with how each was to be evaluated) were as follows:
Comparative store sales (year over year change)
Operating income growth (greater than net sales growth?)
Inventory growth (at a rate less than half net sales growth?)
Return on assets (year over year change)
Wal-Mart used this sentence to describe how they evaluated the metric:
“Inventory growth at a rate less than half of sales growth is a key measure of our efficiency.”
Inventory growth at a rate less than half of sales growth! This of course means that sales growth would be twice inventory growth. That would be incredible. Checking the numbers over the last ten years this happened four times. By the time the 2006 10-K was written, though, Wal-Mart realized that this would be an unrealistic performance measurement. The sentence was changed in the 2006 10-K (and Annual Report) to remove the reference to “half” of sales growth. The sentence now reads:
“Inventory growth at a rate less than that of net sales is a key measure of our efficiency.”
That sounds a bit more realistic and attainable.
An April 20, 2006 article in the Wall Street Journal titled "Wal-Mart Aims To Sharply Cut Its Inventory Costs" directly addressed this issue. Chief Financial Officer Tom Schoewe said Wal-Mart's internal goal calls for cutting its inventory growth rate to half of its sales growth rate. "If you look back at the last six or eight quarters, we have not met that objective," he said. "I think the chances of meeting that objective are greater this year than they have ever been before."
- SandraLv 44 years ago
A friend of mine asked David Glass that exact question about 15 years ago at a Wal-Mart managers meeting since the demographics for Wal-Mart and NASCAR were the same, white,rural,southern, working class (at the time David was the CEO) David told him that they had looked into it and found out that it would cost over $5 million and asked if if it would be worth it to our customers to have one less cashier every Saturday in every store to pay for it. Wal-Mart has always advertised much less than its rivals (for years they only put out one newspaper ad monthly to Kmart and Targets 4 a month) and still spends a much lower % of sales on advertising. The fact that they spend so little on advertising has undoubtly contributed to alot of the negative stories that the media put out about them. Alot of newspapers do not like to bite the hand that feeds them.
- tamara_cyanLv 61 decade ago
Well, the parking lots (usually huge) always seem packed. They must be doing pretty good.