Wall Street Journal
By Karen Talley
Investors will be watching Wal-Mart Stores Inc.'s first-quarter results on Tuesday for signs of a turnaround in its U.S. operations and for new progress in its expanding international business.
Wal-Mart has said its U.S. customers are struggling even more than they were a year ago, hobbled by rising gasoline prices on top of stubbornly high unemployment, and prompting the company to look for growth online and overseas. The U.S. situation makes it unlikely Wal-Mart fiscal first-quarter results will break its string of seven straight declines in quarterly same-store sales, analysts said.
On Friday, Wal-Mart said it agreed to acquire a minority stake in Chinese ecommerce company Yihaodian, which sells groceries, electronics and clothing. Value of the investment was not disclosed. Yihaodian offers next-day delivery to customers in Shanghai, Beijing and Guangzhou.
Wal-Mart has said it expects to earn between 91 cents a share and 96 cents a share for the period. The world's largest retailer is under attack in the U.S. by low-cost dollar stores, and has begun a program to open its own small format stores. The stores are a way to counter the competition and a means for Wal-Mart to fit into cities. Wal-Mart also sees the smaller stores as complementing its large format stores.
The retailer is continuing to build and remodel its traditional supercenters and has placed a reemphasis on its "every day low price" approach to doing business. Various price comparison surveys by analysts show mixed results against competitors including Target Corp. Wal-Mart's efforts to build U.S. sales also involve resuming sales of merchandise that was removed a couple of years ago as part of a program to give stores a less cluttered look.
"A lot of the issues at Wal-Mart are company specific, like taking out products that were important to their core customers," said Patrick McKeever, retail analyst at MKM Partners. "It will take a while for them to correct that. It does not happen overnight."
Aside from U.S. operations, which are the company's core, Wal-Mart is building a strong online presence, going up against online giant Amazon.com Inc., which has been going up against the retailer. Wal-Mart in April announced it is testing home delivery of groceries through an online program in the San Jose, Calif. area.
International growth remains a priority for Wal-Mart, which operates in roughly 15 countries. The company is currently in the midst of trying to enter sub-Saharan Africa through the acquisition of 51% of South Africa's Massmart Holdings Ltd. Overseas businesses, including Brazil, China and Japan, accounted for about one-quarter of the retailer's sales last year.
