David Livingston

Wal-Mart Looks to Reverse Same-Store Slide

August 18, 2010

FROM RETAILWIRE:
The good news for Wal-Mart and its investors is the world's largest retailer posted a higher-than-expected profit in the latest quarter. The bad news is that same-store sales fell for the fifth consecutive quarter. What is your assessment of Wal-Mart's performance in the past year or so and what do you expect from the retailer going forward?      [more...]

Wal-Mart is probably not too worried about this because a decline in same store sales should be expected when you start building stores so close together. Investors might not understand the math. What is really important is if Wal-Mart's sales per square foot is still a certain percentage about the average to their peers. For several years now, Wal-Mart's sales per square foot has been excessively high compared to Target, Kmart, Sears, etc. So they just kept building more stores. They naturally are going to cannibalize some of their sister stores. Are overall sales increasing? Are overall profits increasing? Are competitors closing stores? Are your sales per square foot still at least 20% above the market average? If the answer to those four questions is yes, then same-store sales is not an issue.