Walmart (WMT)

[winston]

Not vested.

Wal-Mart makes splashy price cuts to get mojo back

Wal-Mart bets on $1 ketchup, cheap soda, in campaign to re-ignite sales

ANNE D'INNOCENZIO
AP News

May 29, 2010 10:47 EDT

Wal-Mart is counting on $1 ketchup bottles and sub-$4 cases of Coke to get its low-price mojo back.

The sharp cuts, which came ahead of Memorial Day weekend, have already pushed rivals such as Target into price wars. And the markdowns are expected to keep coming throughout the summer.

They're one of the boldest moves the world's largest retailer is making to turn around sluggish business at its U.S. namesake chain and win back shoppers from rivals. The cuts aren't across the store but target 22 foods and other essentials at an average savings of 30 percent — splashy enough to get attention and perhaps change perceptions.

The world's largest retailer is also restoring items like certain soups and laundry detergent it stopped carrying when it tried to declutter its stores. It's also pushing more basic clothing such as socks and underwear after putting too much focus on trendy items that didn't sell.

Wal-Mart was one of the few beneficiaries when the Great Recession began, as shoppers traded down to save money. Now it's having trouble keeping customers in a slowly recovering economy. Cash-strapped shoppers are looking elsewhere for better deals such as dollar stores and local grocery chains. And some wealthier customers, feeling more flush, are starting to head back to the mall.

Wal-Mart, which generated more than $400 billion in revenue in 2009, has blamed stubbornly high unemployment and tight credit for adding even more financial strain on its blue-collar customers, some of whom have limited access to financial services and are running out of unemployment benefits.

But it also takes part of the blame for four straight quarters of declines in revenue at Walmart stores open at least a year. That's a key indicator of a retailer's health.

"Wal-Mart is all about price, and they're all about one-stop shopping. Those are the key ingredients," said Bob Buchanan, a former retail analyst who now teaches finance at Saint Louis University. "Now, you kind of scratch your head and wonder if either of them are true."

"Wal-Mart has made a lot of noise, but customers want to see it in the stores," he continued. "This action is long overdue. They need to drive that message hard."

Deloris Harris, 72, of Ridgeway, S.C., said she pulled back from food shopping at Wal-Mart in the last year because chains such as Food Lion were offering even better deals.

"Some of the stuff isn't that cheap," said Harris, who picked up 10 ears of corn for $2 and hamburger rolls for 99 cents at Food Lion on Friday. But the 24-pack of Coke for $5 at Wal-Mart caught her attention Thursday night on a run to buy Tylenol. She grabbed it and planned to go back Friday to pick up deals on cleaning supplies.

Wal-Mart acknowledged during its latest conference call with investors that its moves to carry fewer items went too far. It's now replenishing 300 it had dropped. Analysts estimated that Wal-Mart pared up to 15 percent of its inventory, sending shoppers elsewhere in search of their favorite brands.

Wal-Mart is still making big profits. Its first-quarter net income rose 10 percent, fueled by cost-cutting and growth overseas. Wal-Mart's thinking: Lower costs let it lower prices, which in turn should drive up revenue and that money would be invested to yield more cost savings.

In fact, Wal-Mart is bearing the cost of some of the deep price cuts, not its suppliers, according to Bill Pecoriello, an analyst who heads ConsumerEdge Research LLC, based on discussions with industry officials.

According to Pecoriello, on a basket of five food items, from Coke to Lay's potato chips, the total price was $11.23 at Wal-Mart, 24 percent less than it was a year ago. It's also almost 14 percent lower than Kroger and almost 26 percent lower than Safeway, according to Pecoriello's estimates. The firm gathers pricing data representing 15,000 stores across the country.

That doesn't include Wal-Mart's move to lower cans of name-brand Coke and Pepsi further in the past few days, from the announced discounted price of $5 to as low as $3.77 in certain markets. The original price was $6.98 for a 24-pack.

Pecoriello noted in his report that Target was selling 12 packs of soda for $2, roughly matching Wal-Mart's price, while Kroger was selling 12 packs for $2.50, less than a year ago.

Some Wal-Mart stores have sold out of the cans and suppliers are having trouble keeping up, Pecoriello said. He added he hasn't seen such low prices on soda in at least five years and estimates that the overall price of soda is down about 20 percent from a year ago.

Linda Blakley, a Wal-Mart spokeswoman, declined to comment on sales and said it has the lower-price 24-packs only where it faces "regional competitors."

PepsiCo declined to comment, and officials at Kroger Co., Safeway Inc., and Coca-Cola Co. didn't immediately return calls.

Though it sells all kinds of items, groceries are what keep customers coming back, and hits hard on the theme of splashy low prices in recent TV commercials. One shows a friendly associate walking down the store aisle placing the discounted items, from Heinz ketchup to Breyers ice cream. The ads put the splashy low prices, such as the $1 deal for a big, 40-ounce ketchup bottle, at center stage. The original price was $2.42.

Wal-Mart has returned to advertising some of its deals in newspapers, the first time since June 2006, according to Michael Exstein, an analyst at CreditSuisse. In addition to its store circulars, Wal-Mart advertises in newspaper inserts like Parade, which have lower costs and require a longer lead time, Exstein said.

"We are working hard to bring our customers the best prices on items they need right now; and to share the news of these price cuts aggressively," Blakley said.

Source: AP News

[iam802]

Let's observe how WMT react to the 'rising RMB' news

[winston]

Why You Should Begin Buying the World's Safest Stocks By Porter Stansberry
Saturday, July 17, 2010


This month, I faced one of the most difficult choices of my career as an investment analyst.

If you've been reading my Investment Advisory or DailyWealth for more than a month, you probably know I'm concerned with exploding levels of government debt in Europe and the United States. Western governments have taken on obligations they cannot possibly hope to repay. The outcome will be a severe devaluation of their paper currencies. You can read some of my thoughts on this subject here and here.

Now, this is where it gets difficult…

Despite all of the world's credit and currency problems, many of the market's highest-quality companies are once again trading for extremely attractive prices, thanks to the fall in stock prices during the second quarter.

The question that's keeping me up at night isn't whether or not the currency crisis we're experiencing will worsen. I know it will. What keeps me up at night now is wondering whether or not by focusing so much on the risks, I could be missing the opportunities this crisis has created.

You see, despite the huge risks to the global economy, I know it's unlikely that everything will grind to a complete halt or that a new, global war will break out. Having been a leader in warning about the impending sovereign debt crisis, I'm now trying to lead my readers in a new direction – the incredible value presenting itself in the form of the world's biggest global companies.

We begin with a conclusion you might find surprising: Only rarely in history have the world's largest and best corporations been for sale at lower prices. Furthermore, buying blue-chip stocks at these super-low valuations has historically always led to outstanding returns. In short, high-quality stocks are amazingly cheap. And you're probably foolish if you don't at least start to buy.

The chart below shows you the share price of Wal-Mart – the world's leading retailer – compared to its earnings.

As you can plainly see, over the last 12 years, the stock price of Wal-Mart has done exactly nothing. Meanwhile, its earnings have continued to grow, almost every single year, by large amounts.

Wal-Mart is now earning more than $26 billion annually in cash. It is returning roughly $12 billion to shareholders (via dividends and buybacks) and spending $12 billion building new stores or improving old ones. The remaining balance of its cash earnings is going toward repaying debt – almost $2 billion was retired last year.

And yet… the company's entire market value is now $190 billion. That is, if Wal-Mart applied all of its capital toward buying stock, it could take itself private in a little over seven years – assuming no additional growth whatsoever. Given its recent growth rates, it could likely accomplish this goal in something around five years.

A reasonable analyst, adjusting for Wal-Mart's unique resilience and long history of earnings growth, would assign the company a forward earnings multiple of something between five and seven. Meanwhile the stock is currently yielding more than 6%, when you adjust the cash dividends for the share buybacks. In short, Wal-Mart now has an earnings multiple that's roughly the same number as its yield, a situation that is extremely rare in the world's highest-quality stocks.

At the bottom of the stock market in 1932, the S&P 500 traded for less than 10 times earnings and yielded roughly 10%. At the bottom of the market in 1974, the S&P 500 traded at seven or eight times earnings and was yielding nearly that much in income (6.5%). And at the market bottom in 1982, stocks were again trading for around six times earnings, while the dividend yield had increased to almost 7%.

In short, Wal-Mart's valuation suggests we are approaching a bottom in high-quality stocks. While this isn't true – yet – for the market as a whole (today the S&P 500 yields just over 2% in cash and is trading at 17 times earnings), it is true of the market's best companies.


www.dailywealth.com

[winston]

Wal-Mart 2Q profit rises 3.6 pct on cost-cutting

Wal-Mart's 2Q profit up 3.6 pct, raises earnings guidance; key revenue measure disappoints

ANNE D'INNOCENZIO
AP News

Aug 17, 2010 07:44 EDT

Wal-Mart Stores Inc. reported a 3.6 percent increase in second-quarter net income and raised its earnings guidance for the full year as it benefits from cost-cutting and robust global growth in China, Brazil and Mexico.

But a closely watched measure of revenue at its U.S. stores, dragged down by its namesake discount division, fell more than expected as its main customers have felt the biggest impact of the economy's woes.

The discounter said Tuesday it had net income of $3.59 billion, or 97 cents per share, for the period ended July 31. That compares with $3.47 billion, or 89 cents per share, a year ago.

Revenue rose almost 3 percent to $103.7 billion. Revenue at stores open at least a year fell 1.4 percent, worse than the 0.26 percent expected by Thomson Reuters. At Wal-Mart's namesake stores, that measure fell 1.8 percent while at Sam's Clubs, the measure was up 1 percent. The 1.4 percent decline in revenue at stores open at least a year marked the fifth straght quarterly drop.

The measure is a key indicator of a retailer's health.

Analysts had expected earnings per share of 96 cents on revenue of $105.3 billion.

"We continue to focus on our priorities of growth, leverage and return," said Mike Duke, Wal-Mart Stores Inc.'s president and CEO, said in a statement. "The slow economic recovery will continue to affect our customers, and we expect they will remain cautious about spending."

Wal-Mart benefited during the recession as affluent shoppers traded down to cheaper stores. But it acknowledged in May that it's losing some of those customers, who've started to trade back up.

Meanwhile, stubbornly high unemployment and tight credit are still squeezing its main lower-income customers, who are having more trouble stretching their dollars to the next payday.

Wal-Mart's strategy to turn around business at its weak U.S. namesake stores remains in flux amid executive departures and reshuffling.

Bill Simon, formerly chief operating officer, took over Eduardo Castro-Wright's job as president and CEO of the company's U.S. operations in June. Castro-Wright now leads the retailer's e-commerce unit Global.com and its global sourcing division. He will remain vice chairman of the company.

The company is also now seeking a replacement for chief merchant John Fleming, who left Aug. 1 and played a big role in shaping what was on store shelves.

Wal-Mart has said it's own strategies are partly to blame for its weak U.S. business. Wal-Mart has acknowledged that its campaign to declutter its stores went too far, leading shoppers to flee to rivals such as Target Copr. for favorite brands. It has been scrambling to restock some products over the past year.

The company is also focusing on basics such as socks and underwear after pushing trendy fashions and home furnishings, a strategy that hasn't fared well.

In a shift in strategy, Wal-Mart appears to have abandoned efforts to court more affluent shoppers, except for in electronics, David Schick, a retail analyst at Stifel Nicolaus, wrote in a recent note.

But Wal-Mart's profits remain robust. Wal-Mart says it now expects it will earn between $3.95 and $4.05 per share for the year. That's up from $3.90 to $4. Analysts surveyed by Thomson Reuters expect $3.99 per share.

For the third quarter, Wal-Mart expects revenue at stores open at least a year to range from a declne of 2 percent to an increase of 1 percent. That compares wth a 0.5 percent decline in the same period last year.

Source: AP News

[winston]

Not vested

Wal-Mart 3Q profit rises; pressure still on in US

Wal-Mart Stores Inc. reported a 9.3 percent increase in third-quarter net income as the world's largest retailer benefits from cost controls and a robust international business.

The company also raised its full-year quarter profit outlook, but total revenue at U.S. Walmart stores fell as fewer customers visited and spent less when they did. Revenue at stores open at least a year also fell, for the sixth quarter in a row, underscoring the challenges of its U.S. business as many customers struggle economically.

The company posted net income of $3.44 billion, or 95 cents per share, in the quarter ended Oct. 31. That's up from $3.14 billion, or 81 cents per share, in last year's third quarter.

Excluding a tax benefit, the company earned 90 cents per share, which matched estimates from a survey of analysts surveyed by Thomson Reuters.

Revenue reached $101.24 billion, below the estimate of $102.25 billion.

Revenue at stores open at least a year slipped 0.7 percent, dragged down by a 1.3 percent drop at U.S. Walmart stores. The decline is worse than analysts' estimates for a 0.4 percent decrease. The measure rose 2.4 percent at its Sam's Club chain.

"Walmart U.S. will be the price leader this holiday season, and I am confident about improving (comparable sales) for the fourth quarter," Mike Duke, president and CEO, said in a statement.

The company said it expects revenue at stores opened at least a year for its U.S. Walmart business to be anywhere from down 1 percent to up 2 percent in the fourth quarter.

It also predicted that earnings per share for the full year will range from $4.08 per share to $4.12 per share. That's up from $3.95 per share to $4.05 per share. Analysts expected $4.02.

Source: AP News

[winston]

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Wal-Mart Posts 7th Straight Drop in Key US Sales
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CHICAGO (Reuters) - Wal-Mart Stores Inc said sales at its U.S. discount stores open at least a year fell 1.8 percent during the chain's most important quarter.

The world's largest retailer earned $5.02 billion, or $1.41 per share, up from $4.82 billion, or $1.26 per share, a year earlier.

Source: Reuters US Online Report Business News

[winston]

Here is the Forbes 2011 ranking of the top 10:


10. Christy Walton & family (USA) - $26.5 billion, Wal-Mart

Christy Walton is the widow of John Walton, who was the son of Wal-Mart founder Sam Walton.

Sam Walton built the global Wal-Mart empire from a single dime store in Arkansas. It is now the world's largest retailer.


Source: Reuters

[winston]

This confidential Wal-Mart memo could be bad news for anyone banking on a recovery

Visits to Wal-Mart Stores Inc. (WMT)'s U.S. locations open at least a year dropped 2.6 percent from February through June, according to an internal memo, while rivals are attracting customers.

Those Wal-Mart stores had 82.8 million fewer visits through the first five months of the company's fiscal year than a year earlier, says the memo, which was obtained by Bloomberg News. Wal-Mart doesn't disclose those traffic numbers, and David Tovar, a spokesman, declined to comment on the memo.

Wal-Mart's plan to recapture customers by returning thousands of products to U.S. store shelves has failed to reverse a decline in foot traffic at the world's largest retailer, said Jeff Stinson, an analyst at Cleveland Research Co.

That's primarily because Wal-Mart's core low-income customers are shopping less and going to other retailers more often, according to two recent shopper surveys.

"The biggest issue remains weak store traffic," Stinson wrote in a July 14 report. "We believe sales have slowed in the second quarter and are running below plan primarily due to further traffic declines." The Cleveland-based analyst rates the shares "neutral."

Wal-Mart, led by Chief Executive Officer Mike Duke, is restoring an average of 8,500 products to its stores to lure back shoppers still pinched by persistent unemployment and gas prices that have risen 36 percent in the past year. Sales in U.S. Wal-Mart stores open at least 12 months have declined for eight straight quarters.

Wal-Mart's traffic decline comes as some of its direct competitors are getting more visits.


Source: Bloomberg

[iam802]

Wal-Mart China CEO quits as retailer grapples with pork scandal

http://www.reuters.com/assets/print?aid ... 8620111017

SHANGHAI/HONG KONG (Reuters) - The head of Wal-Mart Stores Inc's (WMT.N: Quote, Profile,
Research, Stock Buzz) China business has resigned citing personal reasons, after the world's largest retailer ran into trouble with Chinese authorities leading to store closures and employee detentions.

The departure of China CEO Ed Chan, along with Senior Vice President of Human Resources Clara Wong, is another setback for Wal-Mart which is facing stiff competition from local firms in the strategically important market.

The company, which recently celebrated its 15th anniversary in China, closed more than a dozen stores in central China last week following allegations they sold regular pork as organic pork over the past two years.

Authorities in Chongqing have arrested two Walmart China employees and detained 37 others over the incident.

Both resignations announced on Monday were for personal reasons and had "no correlation" with the investigations in Chongqing, Walmart Asia spokesman Anthony Rose said.

"We have used the last few days to put in place corrective actions in our stores," Rose said, adding that the stores would reopen by October 25.

This is the second round of top-management resignations at Walmart China in less than five months. In May, its chief financial officer and chief operating officer resigned "to explore other opportunities," the company had said.

"It's really hard to say whether this (Monday's resignations) is a consequence of that (pork scandal)," said Torsten Stocker, a China retail analyst with Monitor Group.

"It might be, but I think at the end of the day, it is still not clear what really happened in Chongqing," he said.

"Obviously what happened in Chongqing is impacting their business in Chongqing and presumably ought to be having some impact on the grand overall business. Any type of leadership change like this, it's never a good thing."

STRUGGLE IN CHINA
After entering China in 1996, Wal-Mart's expansion gathered steam in 2007 when it bought a 35 percent stake in Taiwanese hypermarket chain Trust-Mart. It has 353 stores in the mainland.
Wal-Mart's market share in hypermarkets was 11.2 percent in 2010, in second place after China's Sun Art (6808.HK: Quote, Profile, Research, Stock Buzz), but spending for the expansion has weighed on its profitability.

Wal-Mart's problem is that it is trying to compete with domestic chains on price, said Shaun Rein, managing director at Shanghai-based China Market Research Group.

"If your strategy is 'cheaper than Chinese companies', you are never going to win the market," Rein said.

"But that is what Wal-Mart is trying to do. The strategy is all wrong since the very beginning, and that is why it has never been profitable here."

Wal-Mart competes with French hypermarket chain Carrefour (CARR.PA: Quote, Profile, Research, Stock Buzz), Britain's Tesco (TSCO.L: Quote, Profile, Research, Stock Buzz), Germany's Metro AG (MEOG.DE: Quote, Profile, Research, Stock Buzz), China's Sun Art and China Resources Enterprise (0291.HK: Quote, Profile, Research, Stock Buzz).

China's hypermarket sector is forecast to grow at a compounded annual rate of 10.1 percent between 2010 and 2015, according to Euromonitor. But price competition is particularly tough in that segment.

Walmart Asia CEO Scott Price, who will also serve as interim China head, said China was a strong market for the group.

"China is a very important market for Wal-Mart and China's 12th five-year plan will provide strong opportunities to the retail industry," Scott said in a statement on Monday.

FIRMS UNDER SCRUTINY

Major Western firms are under scrutiny from China's state media and face criticism over issues including food safety and garment quality. Some executives complain privately that their companies are subject to stricter enforcement than local firms.

This summer, oil company ConocoPhillips (COP.N: Quote, Profile, Research, Stock Buzz) was roundly criticized by Chinese media over a June oil spill off China's east coast. The State Oceanic Administration has threatened to sue ConocoPhillips, but not its state-owned partner, CNOOC (0883.HK: Quote, Profile, Research, Stock Buzz).

Last week, European luxury group Gucci said it had replaced two managers in southern China after former workers at a store released an open letter alleging employee abuse.

"Walmart's problems are similar to other rivals, particularly the foreign operators, including competition for staff," said Alex Wong, a director at Ample Finance Group.

"A relatively high (staff) turnover rate suggested that it has some problem with its incentive plan in recruiting and retaining sales people," Wong said.

[winston]

Wal-Mart Same-Store Sales Rose Strong 1.3 Percent

(Reuters) - Wal-Mart Stores Inc said on Tuesday that sales at its U.S. discount stores open at least a year rose a better-than-expected 1.3 percent during the third quarter, ending a string of nine consecutive quarterly declines.

http://www.newsmeat.com/news/meat.php?a ... &buid=3281