A Wall Street analyst cast a vote of impatience with Wal-Mart ( WMT) 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.

The company has long attributed its weak same-stores sales to high gas prices, which weigh particularly hard on its lower-income customer base. But Shapira noted in her report that customers who opted to shop at their local supermarkets and drugstores when gas prices spiked, rather than driving the extra miles to a Wal-Mart, don't seem to be returning now that gas prices have eased.

Shoppers "liked what they found at their local supermarkets and drugstores in terms of prices, convenience and store environments," said Shapira.

In order to shore up its battered public image, Wal-Mart has launched an expensive public relations campaign to tout its positive contributions to society. It also has remodeled stores and revamped its product offerings to appeal to a higher-income customer, but so far hasn't had much luck in attracting these shoppers away from its trendier rival, Target ( TGT).

"Wal-Mart's strategic focus has become less clear as current initiatives have not seemed to gain traction," said Shapira. "Will Wal-Mart continue to target incremental sales from higher-end consumers? Or, will the company go back to its roots to reinforce its pricing message? Right now, it's straddling the fence -- attempting to do both without much success."

She said the company's strategic confusion opens the door to changes in leadership.

"There are clear voids in marketing, and merchandising missteps suggest the need for some new talent," said Shapira. "More leadership change means more strategy change, which all adds time to the turnaround."

The selling in Wal-Mart shares spread to the rest of the retail sector, as the S&P Retail Index was recently down 0.5%. HSBC analyst Mark Husson says, though, that Wal-Mart's problems aren't a reflection of the broader industry.

"Obviously the consumer has been gradually slowing down, and everybody sees that, but Wal-Mart has its own issues," Husson says. "Its stores have become middle-aged. They've lost their youthfulness."

Husson, who holds a neutral rating on shares of Wal-Mart, notes that 2007 will be the first year that over 50% of the company's Supercenters are five years old or more. So, he says, the company's remodeling efforts were a smart move, and it's premature to assume they won't start to boost sales soon.

"The new spring merchandise is only just coming in," says Husson. "There was a lot of disruption in the third quarter from all the remodels, so now we should begin to see the benefits of those remodels coming through against a period of time when there was disruption, and that could get the comps going again."