This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Wal-Mart's Sales: Unfixable?

NEW YORK ( TheStreet) -- Wal-Mart (WMT - Get Report) reported its fifth straight quarter of U.S. sales declines, leaving investors asking how the discount behemoth plans to regain shoppers.

While the No. 1 retailer forecasts third-quarter same-store sales between a decline of 2% to a increase of 1%, exactly how it plans on returning to positive sales territory remains unclear.


There's no denying that the aggressive rollbacks put in place during the quarter didn't generate the traffic Wal-Mart expected. Thus, the company will return to its strategy of "everyday low prices."

During the second quarter, Wal-Mart's total revenue rose 2.8% to $103.73 billion, but this fell below analysts' expectations of $105.33 billion. Wal-Mart's U.S. same-store sales dropped 1.8%, at the low range of forecasts.

Chief Financial Officer Tom Schoewe said on call with reporters that the Wal-Mart customer is under such severe pressure that even dramatic discounts are not enough to entice spending.

So what is? "At the end of the day it is a function of price and assortment," Schoewe said. "When we get the two right, that's when we are successful."

Wal-Mart, of course, hasn't gotten the two right for some time, though it appears to be taking proactive steps to mitigate the issue. Wal-Mart is currently in the process of restocking some merchandise that it misguidedly cut under its "Project Impact" initiative. "We took too much out and we are adjusting that," Schoewe said.

Still, problems loom for Wal-Mart's discretionary segments, especially apparel. "Apparel is not where we want it to be, but it is an opportunity for us," Schoewe said. Wal-Mart is now planning on "returning to its roots" with apparel basics like socks, underwear and t-shirts.

Improving its assortment, however, may prove difficult, as Wal-Mart is currently in the process of finding a replacement for Chief Merchandising Officer John Fleming, who stepped down earlier this month after Bill Simon was named the new CEO. Schoewe said that it is the company's intention to fill the position and they are looking at candidates internally and externally.

When will Wal-Mart's sales recover?

Second quarter of 2010
Third quarter of 2010
Fourth quarter of 2010
First half of 2011
Second half of 2011

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Submit an article to us!
WMT $78.13 0.00%
AAPL $125.80 0.00%
FB $77.56 0.00%
GOOG $530.80 0.00%
TSLA $232.95 0.00%


DOW 17,928.20 -142.20 -0.79%
S&P 500 2,089.46 -25.03 -1.18%
NASDAQ 4,939.3270 -77.6020 -1.55%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs