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Wal-Mart: Will It Thrive, Or Merely Survive?

Jul. 10, 2017 8:20 AM ETWalmart Inc. (WMT)37 Comments
MGB Research profile picture
MGB Research


  • With shrinking sales, Wal-Mart appeared to be in trouble during 2015.
  • Customer service and e-commerce operations were both abysmal.
  • Recent improvements make me cautiously optimistic that Wal-Mart can stay on top for the foreseeable future.
  • However, I would like to see the turnaround translate into profits before buying the stock.

Wal-Mart (NYSE:WMT) ranks among the best corporate growth stories of the past half century. For most of its history, Wal-Mart has been on the cutting edge of retail, constantly pushing the envelope. But 45 years after going public, the company was reacting to change rather than creating it. Not only did its online presence badly lag the competition, but also its physical stores were widely perceived as a lousy place to work and shop. As revenue declined for the first time in recent memory, the stock price plunged from a high of $90 at the beginning of 2015 to just $57 by October.

In retrospect, that was probably a buying opportunity. Even for a guy like me that dislikes Wal-Mart both for the poor shopping experience and the effect on society, I am surprised at how far the massive company has come in just a few short years. Despite widespread skepticism of Wal-Mart’s future in the age of Amazon (AMZN), the chain’s recent improvements and its fundamental strengths position the retailer to endure for the foreseeable future. That said, considerable doubt remains as to Wal-Mart’s ability to thrive instead of merely survive.

Wal-Mart: A History of Innovation

At one point, Wal-Mart stood at the cutting edge of retail innovation. Remember how video games used to come packaged in a nice cardboard box? I still have some of them in my basement - relics of an era before the “Wal-Mart effect” shaped the industry.

For the manufacturers, the boxes stood out on the shelves and made their products more visible. But Wal-Mart long ago recognized the inefficiency and stupidity of essentially selling air. The packaging materials cost money, and the additional weight and space on the pallet added to shipping expenses. If Wal-Mart could force the companies to eliminate the money spent on cardboard, then they could

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Analyst’s Disclosure: I am/we are long CHD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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