Wal-Mart Posts Seventh Straight Decline

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Retail megalith Walmart (NYSE:WMT) published its first half results today, reporting its seventh straight quarterly decline in same store sales year-on-year. Walmart share price, nonetheless, rose by 0.49% to 74.39, the neighborhood in which it has been parked since July 2012.

Look at the Situation

If you haven’t discovered by reading my previous columns about Wally World, I don’t care much for the company, either as an investor at this point, or on a personal basis. I have had the dubious pleasure to live near and work with some of the original “Sam’s Boys.” I am also fairly well acquainted with several men who have become extraordinarily wealthy and influential from being a supplier to Walmart, as well as a much greater number who have suffered significant losses for the very same reason. The company has become reckless with its ruthless disregard for its front-line employees, its customers and its suppliers. And it’s beginning to show at the cash registers and the front doors.

It was just last year that most Walmart stores eliminated the much maligned position of Greeter. “Welcome to Walmart” was regarded on the same scale of professional status as “Would you like fries with that?” Obviously, with foot traffic down for the seventh straight quarter, there is less need for greeters. 

Analysts are busy analyzing today as to what has happened to ubiquitous superstores. 90% of all Americans live within 15 minutes of a Walmart. That apparently means that, no matter how far I run, I can’t get far enough away. So, while the analysts analyze, here is my take on why the superstores are losing customers – and it’s not the economy.

  1. People are fed up with the cheap merchandise.
  2. People are fed up with the lack of product expertise of Walmart employees. Of course, with cheap merchandise, who needs expertise?
  3. People are fed up with a decline in variety of items available.
  4. People are fed up with the way they are treated by employees that, on average, make slightly more than $8.00 per hour.
  5. People who work for Walmart are fed up with feeling like they are bring scraped off the bottom of the store manager’s shoes when they clock out from their shift.
  6. People are fed up with shopping alongside people who dress like they bought their clothes at Walmart.
  7. Most people I know who work for Walmart want the same thing: O-U-T, but they do not currently have many, if any, options.

Don’t get me wrong. Walmart isn’t dead. Yet. It may be a slow, agonizing demise, but it will come, because the company will never be able to appeal to the myriads of people who have already chosen to shop elsewhere and the ones who are following in their wake.

Look at the Numbers

Now that I have vented and offered my personal insights (which, I submit, are perfectly valid), let’s look at the numbers.

  • Q2 EPS declined from $1.23 to $1.21
  • Consolidated net sales from all operations increased by 2.8% to $119.3 billion. The increase was driven primarily by the Neighborhood Markets, pharmacy and fuel sales.
  • Even though membership in Sam’s Club increased 11.9%, sales (excluding fuel) failed to increase. My immediate analysis of this is that they are becoming less discriminating about who can join in order to prevent sales from declining.
  • Full year guidance for EPS has been adjusted downward from a range of $5.10 to $5.45 to a range of $4.90 to $5.15.
  • Operating income declined for the quarter and the half for each segment except International, which was up 8.0% and 5.9% respectively.

Here is my advice. It comes free with reading this column. If you are thinking about buying WMT stock, be careful. If you own WMT stock, be careful. The fact remains, you still can’t completely ignore Walmart. It is. And it is what it is.

 

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