This Day On The Street
Continue to site right-arrow
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Walmart CEO McMillon Sees Broad Mandate at Investor Meeting

Stocks in this article: WMT

NEW YORK (TheStreet) - Wal-Mart's (WMT) recently-appointed chief executive Doug McMillon indicated Wednesday the company's board of directors has given him a broad mandate to either shake up the retailer's senior management structure, or consider strategic acquisitions or divestitures, according to a report from Credit Suisse.

On Wednesday, McMillon revealed he was given the opportunity to change the company's senior management structure when he was elected as Wal-Mart's CEO to replace Mike Duke in late November. Credit Suisse interpreted McMillon's comments to mean he has been given a broad mandate by Wal-Mart's board of directors, which could lead to merger and acquisition activity or change to the retailing giant's upper ranks.

"At the meeting it was revealed that at the time of his appointment he was given the opportunity to change the senior management structure, if he saw fit. We think Mr McMillon's mandate includes both acquisitions and divestitures," Credit Suisse analyst Michael Exstien wrote.

Walgreen's US Fate Could Be Sealed By Labor Day 

Hedge Funder Sees KKR's Next Deal In Washington Mutual's Shell

TheStreet's Top 5 Dealmakers

Although Wal-Mart's new CEO may have a wide enough mandate to pursue acquisitions, McMillon signaled the company's preference to grow organically. "While not ruling out acquisitions, the company pointed out their 50% rate of success on these and the preference to build on its own," Exstein wrote.

McMillon's comments came at a special meeting Wal-Mart held with stock analysts and institutional shareholders on Wednesday, which Credit Suisse said was the company's "first coordinated investor relations outreach in memory." The meeting wasn't webcast and doesn't appear on Wal-Mart's calendar of events on its investor relations page.

"There has been no change in the approach to M&A for Mr. McMillon compared to Mr. Duke," Randy Hargrove, a Wal-Mart spokesperson, said in a telephone interview on Thursday.

"[A]s you've seen with our 12 e-commerce acquisitions over the last three years, we intend to be aggressive in adding e-commerce and mobile commerce capabilities, such as the purchase of Adchemy," McMillon said on Wal-Mart's first quarter earnings call in mid-May.

Growing Sales, Merchandising Market Share

McMillon also said on Wednesday that as he prioritizes revenue growth and operational focus, Wal-Mart's investment will be heavily weighted domestically and on smaller stores or e-commerce. Wal-Mart will also prioritize its in-store assortment "as much as or more" than traditional consumables pricing, Credit Suisse said in its report.

With down-market competitor or mired in management change, Wal-Mart may focus on increasing its market share in general merchandise, focusing on that part of the business over consumables.

Family Dollar (FDO) has struggled with poor margins and weak earnings, drawing in the interest of activist investors such as Carl Icahn. Dollar General (DG), meanwhile, recently announced its CEO would depart the company, casting a cloud over its strategic direction. Electronics retailers like Radio Shack (RSH), Best Buy (BBY) and Sears (SHLD), and low-end apparel manufacturers like American Apparel (AAP) have also faced significant financial headwinds in recent quarters.

Holiday merchandising events centered on electronics and technology may be indicative of McMillon's efforts to grow the company's share in the merchandising market. As part of its merchandise effort, McMillon may also prioritize e-commerce, trying to use it as a marketing platform and an anchor for in-store sales.

Given McMillon's comments, Credit Suisse expects that Wal-Mart may pick up market share in coming quarters from retailers who are facing pressure down market or in having adequate assortment. Wal-Mart also said it has seen little change to the economic health of its consumers in the past six months and doesn't forsee any gross margin pressure in the second quarter versus the first quarter.

Credit Suisse holds an "outperform" rating and a $87 a share price target for Wal-Mart. Excluding dividends Wal-Mart shares have fallen over 3% year to date.

-- Written by Antoine Gara in New York

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs