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Walmart’s way to growth

Annie Baxter Feb 19, 2015
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Walmart’s way to growth

Annie Baxter Feb 19, 2015
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Walmart scored low marks in a survey of major U.S. retailers released Wednesday. The American Customer Satisfaction Index says the retail giant came in below competitors like Target and Family Dollar.

Walmart’s earnings paint a somewhat rosier picture of its performance. On Thursday, the company reported pulling in $1.61 a share in the fourth quarter  higher than the predicted $1.53  but still fell short on earnings with a reported $131.6 billion.

Analysts say Walmart may try to accelerate growth in some key areas, like e-commerce, where it has made big strides.  

“Those companies investing in mobile, like Walmart is, seem to be pulling ahead of the competitive set,” says Sucharita Mulpuru is a retail analyst with Forrester Research.

Another growth area: Walmart’s smaller store format, called  Neighborhood Market stores.  

But consumer research analyst Brian Yarbrough with Edward Jones is skeptical about how much those growth areas can boost Walmart’s bottom line. He says supercenters are still the main drivers of operating income. 

“If the U.S. supercenters are still just kind of mulling along and not gaining steam,” he says, “they’re really not going to be able to show any kind of earnings growth and revenue growth at the overall Walmart company.”

Yarbrough says that picture will be hard to change as shoppers turn increasingly to low-cost competitors like dollar stores.

Part of the problem, he says, is that Walmart is a mature retailer.

“It’s difficult to grow when you’re this big,” he says.

 

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