Is Wal-Mart Too Big to Fail? - TheStreet

Is Wal-Mart Too Big to Fail?

There is no question Wal-Mart is a massive company -- still, the enormous scope of the discounter may surprise you.
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NEW YORK (TheStreet) - How many retailers does it take to equal the size of Wal-Mart (WMT) - Get Report?

The answer: it takes a full six of the nations' largest companies -- including

CVS Caremark

(CVS) - Get Report

,

Costco Wholesale

(COST) - Get Report

,

Home Depot

(HD) - Get Report

,

Target

(TGT) - Get Report

,

Walgreen

(WAG)

and

Lowe's

(LOW) - Get Report

-- to equal the scale of Wal-Mart's revenue.

Wal-Mart racked up revenue of more than $400 billion in 2008, which was six times that of rival Target, and the same as these six retailers combined, according to research conducted by Consensus Advisors, a boutique investment banking firm.

Looking further down the totem pole, it would take the revenue of the 12th largest retailer through the 137th largest combined, to equal that of Wal-Mart, according to Consumer Advisors.

When

Staples

(SPLS)

, for example, reports a 4% increase in same-store sales, that impact is about $923.4 million in additional revenue. But if Wal-Mart grows comparable sales 4%, the result is an incremental $16 billion in revenue. This makes Wal-Mart's incremental revenue, alone, bigger than the entire

Gap

(GPS) - Get Report

business.

Wal-Mart's health is an essential barometer of the strength of the economy, suffice it to say that there won't be a full recovery until Wal-Mart's numbers say so.

If investors need another sign that the recovery will be drawn out, this is it: In its first quarter, Wal-Mart saw yet another decline in same-store sales, as traffic waned. This marked the fourth consecutive quarter in which Wal-Mart saw a decrease in comparable sales.

At the time, CFO Thomas Schoewe told reporters: "The areas with the highest rate of unemployment also posted the lowest comps. The number of trips a customer is able to make to the store decreases as gas prices go up over 40%, which has been a major drag on traffic."

Wal-Mart's outlook was also disappointing, as the company is now looking for earnings between 93 cents and 98 cents a share, which is poised to fall short of Wall Street's forecast of 98 cents.

"Our guidance is based on our view of the global business. This includes the continuing challenging sales environment in the United States," Schoewe said.

Wal-Mart has lived through several economic pull-backs, but this recession was the first time the company recorded a decline in U.S. store sales since going public in 1969. This fact alone, should be a clear indicator that this economic recovery will be very different than any other.

-- Reported by Jeanine Poggi in New York.

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