Goldman Gloomy on Wal-Mart

A Wall Street analyst cast a vote of impatience with Wal-Mart (WMT Quote) on Monday after soft sales over the holiday season sowed doubts about the discount retailing giant's strategy.

Goldman Sachs analyst Adrianne Shapira downgraded shares of the world's largest retailer to neutral from buy and lowered her one-year price target on the stock to $51 from $53. She also brought down earnings expectations for 2007, saying that continued top-line weakness is evidence that Wal-Mart's efforts to rejuvenate its business aren't paying off.

"We expect 2007 to be at best another transition year -- at worst a year characterized by further missteps and strategy shifts," Shapira said in a research note. "Despite over 1,300 remodels, merchandise overhauls and aggressive promotions, sales have become increasingly pressured."

For 2007, she lowered her earnings estimate on Wal-Mart to $3.10 from $3.14, and for 2008, she's now predicting EPS of $3.51, down from an earlier view of $3.54.

Shares of Wal-Mart recently were down 19 cents, or 0.4%, to $47.20.

Shapira also said she expects Wal-Mart to cut its guidance for 2007 to "a more realistic 9% to 10% growth rate" after more top-line weakness and heavy markdowns. Currently, the company expects its earnings to increase by at least 12%.

Last week, Wal-Mart reported a 1.6% increase in December same-store sales, or sales at stores open at least a year. That continued a string of relatively meager monthly sales numbers as the discount giant struggles to reinvigorate its business amid a slowdown in consumer spending and a storm of public criticism over its employment practices.