By Andrew Leckey

About Wal-Mart Stores Inc.

Ticker: WMT

Exchange: NYSE

What does the company do? Mass-market retailer

Financial report: FY 2010 (ended Jan. 2010)

Net sales: $408.2 billion

Net income: $14.3 billion

Q. Is my Wal-Mart Stores Inc. stock going to revive? It frustrates me.--P.W., via the Internet

A. The world's largest retailer fared well early in the recession as consumers became more budget-conscious.

However, nagging U.S. unemployment and some uncharacteristic mistakes in merchandising have since slowed it down. Indicative of its struggles have been several key executive departures. Most recently, CFO Tom Schoewe announced his retirement and was replaced by Charles Holley, VP of finance and treasurer.

International growth is critical. It has offered a hefty--some say extravagant--$4.2 billion to acquire South Africa's Massmart Holdings, which has stores in 13 African nations. The deal has met with resistance from South Africa's largest labor unions.

To emphasize its low-cost focus in the U.S., Wal-Mart Stores Inc. has partnered with health-care benefits provider Humana to provide a Medicare Part D prescription plan offered at one price nationwide.

A cell phone plan under its own brand with no contract and a flat monthly fee was launched. It has also begun selling Apple's iPad, which will help holiday sales.

Shares of Wal-Mart Stores (WMT) are up 2 percent this year following last year's 3 percent decline. The retailer is in excellent financial shape with plenty of cash for expansion or acquisitions.

Despite the positives of its dominating size and famous cost efficiency, Wal-Mart Stores Inc. faces a number of employee discrimination lawsuits. It must also cope with economic uncertainties, the potential for deflation in grocery prices and problems associated with expanding into new nations.

The consensus rating on Wal-Mart Stores Inc. shares from Wall Street analysts is currently "buy," according to Thomson Reuters, consisting of 14 "strong buys," nine "buys" and seven "holds."

Wal-Mart Stores Inc. has more than 8,500 stores in 15 countries, nearly half of them in the U.S. About one-fourth of its profits currently come from overseas.

It recently announced it is ending its automatic profit-sharing contributions for employees, instead contributing up to 6 percent of pay so long as the worker contributes an equal amount.

Earnings are expected to increase 10 percent this year, compared to a 52 percent increase projected for the retailing industry, according to Thomson Reuters. The forecast is for a 10 percent growth rate next year vs. 20 percent expected industry-wide. The five-year annualized return is estimated to be 10 percent, compared to 16 percent expected for its peers.

In line with its stated goal in 2005 of obtaining 100 percent of its power from renewable resources, Wal-Mart Stores Inc. is beginning installation of thin film solar in its stores. That technology used for roofs and other building purposes is already popular with utilities.

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Investing - International Growth Critical for Wal-Mart | Wal-Mart NYSE:WMT

© Andrew Leckey

 

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