This coming week will be a defining week for the world’s largest retailer Walmart. They are not releasing earnings, but have their Wall Street analysts meeting. The main topic will most certainly be the management moves within the company, especially Walmart U.S. movement.
Over the past 6 months, Walmart has promoted, reassigned, or accepted the resignation/retirement of five Executive level officers. The initial reactions from analysts look at the management moves as unsettling. There has not been a breakout performance as some had hoped. Walmart stock has only been up 1.9% for the year, close to 15% lower than the S&P Retail Index and 14% lower than rival Target.
Walmart U.S President and CEO Bill Simon attempted to turn the company around since his appointment. Simon has stated the turn won’t be until the fourth quarter. His first goal was to increase foot traffic into the stores and win back the customers who traded up after the recession loosened. Programs such as “Rollbacks”, temporary price cuts, and a reduction of items during remodels failed to win the customer back into stores.
Another concern is the potential acquisition of South African retailer Massmart. Janney Capital Marketers analyst believes Walmart would better suit investors if it focused on the United States business. Company officials have stated their growth opportunity is in international. The growth vehicle for the U.S. is in the form of a smaller formatted store. Walmart will announce plans later this week on its strategy to build stores in the neighborhood of 20,000 – 60,000 square feet.
One strategic plan rumored is the iPad release within the next coming weeks and the introduction of a nail polish line from pop sensation Justin Bieber. Other than those two items, Walmart has planned to return to its “Everyday Low Price” initiative.
With sagging sales in its U.S. division, management changes, and an unclear strategy, what will Walmart do next? The bigger question is how will investors react to the apparent uncertainties within Walmart?