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Wal-Mart Stores, Inc. (WMT): Is This a Dull Start to a Bright Future for This Company?

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The largest retailer, the biggest private employer, and the third-largest public corporation in the world — Wal-Mart Stores, Inc. (NYSE:WMT) — recently declared its first quarter results for fiscal 2014; which were indeed – lackluster!

The global retailing Goliath reported its earnings on May 16. The company, operating in 15 countries under 55 different names, is counted among the most valuable companies in the world. But, its recent numbers have a different story to tell.

Wal-Mart Stores, Inc. (NYSE:WMT)

What the reports have to say?

Total sales were $113.4 billion, which was an increase of just 1% over last year. According to the company, fluctuations in currency exchange rates have had a negative impact on net sales of $1 billion, and thus, revenue was below consensus estimates.

U.S. comp sales dipped 1.4 % because of a 1.8% decline in store traffic. Owing to the year-end complications related to the fiscal cliff, tax refunds were delayed this year. The IRS delayed the filing process by 15 days, resulting in refund checks coming later than usual. IRS reported that U.S. consumers received about $9 billion less in tax refunds this year.

Earlier this year, the payroll tax increase has particularly impacted Wal-Mart Stores, Inc. (NYSE:WMT)’s low income segment customers. Poor sales of warm-weather related items such as outdoor furniture, sporting goods, and spring clothing also played their part in bringing down comparable store sales. Moreover, Wal-Mart Stores, Inc. (NYSE:WMT)’s management stated that the price inflation of grocery items (which contributes more than 50% to the retailer’s revenue) was lower than expected. All the factors are likely valid for a company as broad and encompassing as Wal-Mart Stores, Inc. (NYSE:WMT).

Membership and other income increased 1.6% versus last year, due primarily to an increase in membership income. The diluted earnings per share were $1.14, a 4.6% increase compared to $1.09 last year. This was a penny below consensus estimates. Free cash flow for the quarter totaled $1.9 billion, lower than that of the prior-year period. It benefited from a substantial amount of accrued income taxes. Even e-commerce sales grew more than 30% compared to last year’s first quarter.

Although the numbers were below expectations, the future still looks bright as we’ll see below.

In the news!

“Our mobile strategy is as simple as it is audacious. We want to make mobile tools that become indispensable for our customers while shopping in our stores and online,” said Gibu Thomas, global head of Wal-Mart Stores, Inc. (NYSE:WMT)’s mobile division, on May 16, 2013, at the CTIA Wireless conference in Las Vegas.

Wal-Mart has come up with a brilliant idea to tell you what to buy using your mobile device! It’s using its massive data collection in association with big data to make it a reality.

By leveraging big data, it is developing predictive capabilities to automatically generate a shopping list for customers, based on what they purchase each week. Also, with its already present Geo-fencing feature, the app senses when the user is in a Wal-Mart store in the U.S. It then prompts the user to switch to “Store Mode” which allows them to scan QR codes for prices and discounts.

Also, the user can voice command the app to search for a particular item within a specific budget. The app subsequently generates a list of best selling items of that type in the requested budget requirements, available in the store.

With mobile-influenced offline sales expected to reach $700 billion by 2016 (according to Deloitte) it’s not astonishing that Wal-Mart is doing everything it can to get its mobile strategy in order, including harnessing the power of big data to drive tools and services.


“Compared to non-app users, customers with a Wal-Mart app make two more shopping trips a month to our stores and spend nearly 40 percent more each month,” said Thomas.

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