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

Can a Wal-Mart Lifer Fix Its Broken Image?

NEW YORK (TheStreet) -- Wal-Mart (WMT - Get Report) lifer Doug McMillon has his first workday as CEO today.

It's going to be a long, long day.

Wal-Mart, as a company, has long seemed like a retail version of the Borg, the Star Trek villains that were half-man, half-machine. You will be assimilated. Resistance is futile.

The company has spent decades tearing through the American landscape with its huge stores, destroying town centers in the name of low prices. More recently it has moved into big cities, expanded overseas, and built the second-largest online store in the world.

But contradictions are building within the model. Keeping costs down means keeping wages down. The company has found itself with a target on its back. It's considered overly American in international markets and overly aggressive in domestic ones.

This culminated in a rare earnings warning last week in which the company acknowledged problems in China and Brazil, but also warned that same-store sales in the U.S. will be down, as will be those at Sam's Club warehouses.

Wal-Mart blamed bad weather and reductions in the Supplemental Nutrition Assistance Program (SNAP) for the U.S. problems. Labor groups have long noted that many Wal-Mart employees rely on public assistance programs.

Even Wal-Mart bulls, like those at Planet Retail, were alarmed, especially by the Sam's Club weakness, calling it "a bolt from the blue." It was especially alarming since Sam's Club rival Costco (COST) beat expectations on same-store sales over Christmas.

Bill Simon, president and CEO of Walmart US, who joined the company in 2006 from restaurant company Brinker International (EAT), said last year the company was at an "inflection point," by which he meant it would be opening more small stores and fewer Supercenters.

But it's also at an inflection point in terms of its image. What the earnings warning means is that the company is not connecting well with higher-income customers.

Do such customers care that the National Labor Relations Board issued a consolidated complaint last month against the company, charging that it "unlawfully threatened, disciplined and/or terminated" employees engaged in legally protected protests over wages and working conditions?

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
WMT $76.11 0.00%
AAPL $131.39 0.00%
FB $80.48 0.00%
GOOG $542.51 0.00%
TSLA $245.62 0.00%


DOW 18,285.74 +0.34 0.00%
S&P 500 2,130.82 +4.97 0.23%
NASDAQ 5,090.7940 +19.0510 0.38%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs