Wal-Mart Loses Its Way

There's wasn't much love going around for Wal-Mart (WMT - Cramer's Take - Stockpickr) Tuesday after the retail giant reported a lackluster first quarter and said the second quarter doesn't look much better.

Wal-Mart's earnings for the period were in line with forecasts, although revenue was below estimates. Additionally, the company projected second-quarter earnings of 75 cents to 79 cents a share, allowing for downside to Wall Street's estimate of 79 cents.

While CEO Lee Scott pointed out that revenue and earnings were at record levels, he admitted that "there was an opportunity to have done better."

Indeed. The company's sales remained sluggish, and the retailing giant appears to be trying to figure out what it wants to be, even though it's all grown up.

Shares of Wal-Mart recently were down a modest 18 cents to $47.66. The stock is trading at a historically low multiple of 16.5 times earnings, but now isn't the time to pile into the shares. There are certainly too many problems -- and too much confusion.

Identity Crisis

To its credit, Wal-Mart effectively kept a lid on costs in the first quarter. Gross margin declined just 6 basis points, despite an unfavorable sales mix toward lower-margin products.

Operating margin improved 9 basis points, though it was flat when one-time items were removed. The company also saw gains in labor productivity and only a slight increase in markdowns.

	What does Wal-Mart need to do to get back on track? Answer Here