Benzinga  2 hrs ago  Comment 
JPMorgan analyst Christopher Horvers has downgraded Vitamin Shoppe Inc (NYSE: VSI) from Overweight to Neutral and lowered his price target from $33 to $28. The downgrade comes in the wake of competitor GNC Holdings, Inc (NYSE: GNC)’s earnings-...
CNNMoney.com  6 hrs ago  Comment 
Walmart is planning to put helpers at checkout lines to streamline holiday shopping -- and it's not even Halloween yet.
Reuters  Oct 27  Comment 
Wal-Mart Stores Inc said on Wednesday it will make tens of thousands more items from its online assortment available for same-day store pickup, and will offer more lower-priced items instead of deals as part of efforts to attract shoppers this...
Forbes  Oct 26  Comment 
The most recent short interest data has been released for the 10/14/2016 settlement date, and we here at Dividend Channel like to sift through this fresh data and order the underlying components of the Dow Jones Industrial Average by "days to...
newratings.com  Oct 26  Comment 
BENTONVILLE (dpa-AFX) - MoneyGram (MGI) announced a new cross border money transfer product for Walmart customers sending from any U.S. Walmart location to any Walmart Mexico location. Walmart2Walmart Mexico powered by MoneyGram is a new service...
newratings.com  Oct 25  Comment 
BENTONVILLE (dpa-AFX) - Retail giant Walmart has removed a Halloween costume from its website after customers deemed it was inappropriate. Several shoppers noticed the "razor blade suicide scar wound latex costume make up" kit online for $3.99...
Reuters  Oct 25  Comment 
* Says acquires mixed-use retail-office centre anchored by Walmart and Home Depot in the heart of Pointe Claire, Quebec
Wall Street Journal  Oct 25  Comment 
Retailer Wal-Mart de Mexico SAB reported a rise in sales and profits in the third quarter as Mexicans continued to consume at a solid pace thanks to credit and employment growth amid subdued inflation.
Forbes  Oct 24  Comment 
Walmart's investment in an online grocery delivery company is the latest advance in its rapidly growing alliance with JD.com, which could help to reignite its stagnating position in China's retail market.


Wal-Mart Stores, Inc. (NYSE: WMT) is the world's largest retailer and grocery chain by sales. Wal-Mart is so large that its almost 50% more than its 5 closest competitors combined, including Target (TGT) and Sears Holdings (SHLD). Because of its mammoth size and buying power, Wal-Mart can buy its products at rock-bottom prices, exchanging high purchase volumes for low cost while passing the savings onto its customers. Many suppliers give in to Wal-Mart's pressure because they depend on the discount retailer for a majority of their sales.

Conversely, Wal-Mart's reliance on Chinese-made imports makes the company vulnerable to a weakening dollar or strengthening of the Yuan. Wal-Mart purchases billions worth of merchandise directly from China every year with many of its other inventory from companies like Mattel (MAT) coming indirectly from China. In fact, if Wal-Mart were a country, its imports are so substantial that it would be China's sixth largest export country. A stronger Yuan means that Wal-Mart will have to pay more for its merchandise from China, an issue that threatens Wal-Mart's bottom line.

Company Overview

Wal-Mart operates 8,000 stores across three business segments of retail stores worldwide that offer a wide array of general merchandise including groceries, apparel, electronics, and small appliances. In addition, the company is the world's largest retailer and grocery chain by sales and just over half of the company's sales comes from grocery items. Over half of the company's stores are located in the United States, with the majority of international stores located in Central and South America and China.

Business Segments

Wal-Mart Stores (63.8% of Revenue)

Wal-Mart stores come in one of three traditional formats:

  • Supercenters average about 185,000 square feet in size and carry general merchandise and include a supermarket.
  • Discount Stores average approximately 108,000 square feet in size and carry a wide assortment of general merchandise, but a limited assortment of food products.
  • Neighborhood Stores are usually about 42,000 square feet in size and carry a limited assortment of general merchandise, but have a full supermarket.

Sam’s Club (11.5% of Revenue)

Provides goods for stores, restaurants, offices, daycares and schools, and motels. Sam’s Club management remains focused on growing this foundation and improving its relationships with small business owners. To this end, the company has expanded its offerings of office furniture and restaurant supplies. The company also has services geared towards small business, such as prescription drug plans and worker’s compensation claims.

Wal-Mart International (24.7% of Revenue)

Wal-Mart operates international locations of its Wal-Mart and Sam's Club stores as well as other retail and supermarkets in Central and South America, Mexico, Canada, Japan, China, and the United Kingdom. The company also has a global e-commerce unit called Global.com. The purpose of the site is to drive online growth in new and existing markets.

Trends and Forces

Relying on Imports from China Makes Wal-Mart Vulnerable to Currency Rate Changes

Wal-Mart depends heavily on China for manufacturing its merchandise as it purchases billions of dollars worth of merchandise every year. Additionally, many of the company's suppliers like Mattel (MAT) manufacture their products in China, which in turn are sold in Wal-Mart stores. Wal-Mart's imports are so substantial in fact, that if Wal-Mart were a country, it would be China's sixth-largest export market. By outsourcing to China, Wal-Mart is able to secure lower costs of inventory, which the company in turn passes on to low prices for customers.

However, as a result of its dependency on Chinese manufacturing, Wal-Mart is vulnerable to fluctuations in the value of the dollar compared to the Chinese Yuan. If, for example, the dollar weakens compared to the Yuan, the price of Wal-Mart's Chinese imports would rise. As a result, the company would either have to raise its prices or would have to cope with narrowed gross margins, reducing its profitability. Additionally, the company is vulnerable to adverse legislation, such as higher tariffs, that would raise the cost of its Chinese imports.

Wal-Mart Low Cost Leadership

Wal-Mart is the largest retailer in the world by sales, with almost 50% higher sales than its 5 closest competitors combined, including Target (TGT), Sears Holdings (SHLD), and Macy's Inc. (M). Wal-Mart uses its enormous size and buying power to pressure its suppliers into extremely low prices, offering orders of high volumes of merchandise in exchange for low prices. Wal-Mart then passes on these savings to its customers. Since many suppliers depend on Wal-Mart for a majority of its business, companies often give in to Wal-Mart's cost cutting demands, narrowing their margins or even redesigning their product offerings.

Wal-Mart's bargaining power has helped the company maintain its low price leadership despite fluctuating commodities prices. For example, to fight rising prices of gasoline, grain, and dairy products, Wal-Mart pressured companies like General Mills (GIS) to shave its costs by implementing redesigns of its products and packaging.


Domestic Competitors

Target (TGT) is Wal-Mart's most direct competitor, offering a range of general merchandise in a similar store format (standard Targets, with limited food offerings, compare to Wal-Mart's discount stores, and Supertargets compare directly to supercenters). Target’s major competitive advantage over Wal-Mart lies in its customer base: the average household income for Target customers is about $50,000 a year, whereas the average yearly income for a Wal-Mart customer is only $35,000. Finally, because of its focus on low prices, Wal-Mart has found it difficult to promote higher-quality items or private labels that come in at a higher price point; meanwhile, Target has had success with its quality-at-value-prices strategy among higher-income demographics, where price is not the only influence on sales. This higher-income customer base gives Target more stability than Wal-Mart, particularly as energy costs rise and the real estate market slows.

Kmart (SHLD), as the third discount retailer of the "Big Three", has seen steadily declining sales since 2000, losing considerable market share to both Wal-Mart and Target.

Other Retailers

As a large-scale retailer, Wal-Mart competes with a wide variety of other, specialized retailers, such as Safeway in groceries, Best Buy (BBY) in consumer electronics, and department stores such as Macy's in apparel and home decor. Wal-Mart’s focus on price differentiation means that these companies, while competing in overall market share, are not necessarily competing for the same type of customer; however, in more volatile or price-sensitive markets, such as consumer electronics, discounters like Wal-Mart are able to leverage their pricing advantage and apply increasing pressure on other retailers.

Sam's Club directly competes with Costco Wholesale (COST) and BJ's Wholesale Club (BJ) in the warehouse club sector, where Costco has the advantage in terms total sales.

International Competitors

Wal-Mart's major international competitors are Britain's Tesco, France's Carrefour, and Germany's Metro. Each of these companies have a competing presence in China, the UK, and Japan, with Wal-Mart contending with at least one of them in many of its other markets.


Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki