T2_WMT_paper - FIN 310 Investments Jivko Chiderov, Linda...

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FIN 310 Investments Jivko Chiderov, Linda Choo Company Report Vrinda Patel, Jerry Vega December 7, 2004 Wal-Mart Stores, Inc. (WMT 52.50) Hold WMT Reports Good Sales And Earnings, But Competition Is Also On The Rise. Downtrend Of Consumer Confidence Despite The Encouraging Economic Forecasts Brings Uncertainty Into The Future. Company Overview Wall-Mart Stores, Inc. (WMT) was incorporated in 1969 and it operates retail stores in various formats around the globe. It is the largest retailer in the world and it generates more than 260 billion dollars revenue a year. Wal-Mart organizes its business in three segments Wal-Mart stores, SAM s clubs and International. The Wal-Mart stores segment is the largest in the Company s business. It includes discount stores, supercenters, and neighborhood markets. For the year ended January 31, 2004 (Fiscal year 2004) the Wal-Mart stores segment accounted for 68 % of the sales. For the same period SAM s clubs brought in 13.5 % of the sales. It is also the largest membership warehouse club chain in the US. Wal-Mart hedges the risk of the American retail market with growing International segment. For the 2004 fiscal year the sales abroad accounted for 18.5 % of the Company s sales revenue. The international segment of Wal-Mart includes operations in Argentina, Brazil, Mexico, China, Germany, UK and Puerto Rico. Additionally, the Company owns about 37.8 % of Sieyu, a Japanese retail chain with more than 400 stores in Japan.
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The key officers at Wal-Mart are the Chairman Robson Walton and the CEO Lee Scott. In their letters in the 2004 annual report, both of them emphasized how important the growth potential is for Wall-Mart. Examples of its growth is the increase of almost 10% increase in sales for the third quarter this year compared to a year ago. EPS also showed a solid growth of 15.25 % for the same period. Even though financial performance is important to the upper management of Wal-Mart, they realize that is not the only mean by which to measure its operations. Recognizing its leadership position in the retail industry, Wal-Mart s key officers are focusing on setting higher standards in their relationships with customers, suppliers, associates and communities. According to Rob Walton, these higher standards will be the factors on which the long term success of Wal-Mart will depend on. The workforce of Wal-Mart is about 1.5 million people and their needs and characteristics are constantly changing. Therefore the ideas of upper management that Wal-Mart needs to consider not only its customers and suppliers, but also its employees when making long term decision seem to be on the right track. One step in this direction is providing diverse benefits and policies that will adapt the Company s corporate culture to the needs of its employees. Some of the benefits offered by Wal-Mart include Medical and Dental insurance, 401K plans, stock options and profit sharing programs and various incentive opportunities. However, the size of the workforce and the fact that workers are not yet unionized may present
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This note was uploaded on 03/28/2011 for the course ACCOUNTING 501 taught by Professor Patriciam.casey during the Spring '08 term at National.

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T2_WMT_paper - FIN 310 Investments Jivko Chiderov, Linda...

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