Marilia Mezadri

Background Wal-Mart was originally opened in Rogers,

A.R. by Sam Walton in 1962 and has been growing since then. Walmart's slogan was their mission statement:

“We save people money so they can live better.” The purpose of the company was, if they could lower the cost of living for everyone it would give the world the opportunity to have a better life by saving money. – “If we work together, we’ll lower the cost of living for everyone…we’ll give the world an opportunity to see what it’s like to save and have a better life.” –Sam Walton

Company Structure

Gregory B. PennerChairman Walmart Board of Directors - General Partner of Madrone Capital Partners.

Greg ForanPresident and CEO, Walmart

U.S.

Claire Babineaux-Fontenot

Executive Vice President and

Treasurer

David CheesewrightPresident and CEO, Walmart International

Neil M. AshePresident and CEO, Global eCommerce

and Technology

Rosalind Brewer

President and CEO, Sam’s Club

Doug McMillon

President and CEO, Wal-

Mart Stores, Inc.

Gregory B. PennerChairman Walmart Board of Directors - General Partner of Madrone Capital Partners.

Penner is only the third person to serve in the position, following his father-in-law, Rob Walton, and company founder Sam Walton.

senior vice president and chief financial officer in Japan

senior vice president of finance and strategy for walmart.com.

Previously, Penner also worked as a financial analyst at Goldman, Sachs & Co., Inc., and as a general partner of Peninsula Capital.

Doug McMillonPresident and CEO

1984 - started out as an hourly summer associate in a Walmart distribution center1990 – assistant manager in Tulsa, Okla.1998 – buyer trainee2009 - board of directors for Wal-Mart Stores

Greg ForanPresident and CEO, Walmart U.S. Previously, he served as president and

CEO of Walmart China. 2011 - Greg joined Walmart International

as a senior vice president. Prior to Walmart, Greg held a number of

roles with Woolworths, the leading retailer in Australia and New Zealand.

David CheesewrightPresident and CEO, Walmart International

1995 - Mars Confectionary in the U.K. in sales, marketing, supply chain and manufacturing.

1999 – Asda online grocery program. 2004- chief operating officer of Walmart

Canada. 2008 -  president and CEO of Walmart Canada. 2011 - he was president and CEO for

Walmart’s EMEA (Europe, the Middle East and Africa) and Canada region.

Rosalind BrewerPresident and CEO, Sam’s Club

2006 -  regional vice president, overseeing operations in Georgia.

2008 - division president of the Southeast, and then president of Walmart East.

she worked for Kimberly-Clark Corp. for 22 years, starting as a scientist and eventually becoming president of the Global Nonwovens Sector in 2004.

Neil M. AshePresident and CEO, Global eCommerce and Technology

1998 - Neil was CEO of CNET Networks, taking it from a small magazine and events operator to a highly profitable online business.

2006 - President of CBS Interactive, making CBS.com the largest television network site in the industry.

2012 – leader of Walmart’s Global eCommerce Division

2016 – leader of Walmart Technology, Walmart’s global technology division, aligning Walmart’s stores and e-commerce technology teams to offer seamless shopping for customers across online, mobile and stores.

KEY FINANCIALS 2015

$ millions % change

Revenues ($M) 485,651 2%Profits ($M) – net income 16,363 2%

Total Stockholder Equity 81,394

Employees 2.200Market Value (as of March 31, 2015) 265,344

Profit RatiosProfit as % of Revenues 3%Profits as % of Assets 8%Profits as % of Stockholder Equity 20%

Earnings Per ShareEarnings Per Share ($) 5EPS % Change (from 2013) 3%

EPS % Change (5 year annual rate) 6%

EPS % Change (10 year annual rate) 7%

Total ReturnTotal Return to Investors (2014) 11%Total Return to Investors (5 year, annualized) 12%Total Return to Investors (10 year, annualized) 7%

Walmart Also Appeared On These Lists:• Global 500: Ranked #1• World's Most Admired Company: Ranked #38

SWOT ANALYSIS

Strengths 

Weaknesses 

Its network of nearly 4,000 stores in the U.S. can serve as a supplemental distribution network, speeding up delivery

Clout with suppliers mean it can easily compete on price

 

Fresh food selection that shoppers find uninspiring

High exposure to lower income shoppers who aren't fully benefiting from the economic recovery

 

Opportunities 

Threats 

Flatter org chart that gives workers at the store level more influence in what a Walmart store sells, making it quicker to respond to marketplace changes

Bigger push into organic foods

 

Target is re-energized and highly focused on food, as well as expanding its own chain of small-format stores

The dollar stores continue to expand, and their low prices make them desirable alternatives for those mid-week "fill-in" trips

 

Biggest Competitor TARGET

  Walt-mart

Target Sector

Gross Margin (TTM)

24.85 29.67 24.16

Gross Margin – 5 years average

24.95 30.75 23.53

Net Profit Margin (TTM)

3.37 3.69 10.35

The Bottom Line 

3.63 4.04 10.55

Shareholder Value

Despite some recent operational and public relationship difficulties shares continue to gain ground. Wal-Mart's financially sound strategy has created a lot of shareholder value already, and is likely to do so in the future.

 A new $15 billion share repurchase program by the company's Board of Directors. The new repurchase program allows Wal-Mart to repurchase up to 6% of its shares outstanding at current prices.

The company today raised its dividend more than 20%, giving the stock a respectable 2.75% yield.

Wal-Mart is planning to build much smaller stores that will be closer to the neighborhoods where customers live, directly competing with these other three stores on their home turf.

Stock Information

Today's High /Low $ 66.35 / $ 64.68Share Volume 10,181,79590 Day Avg. Daily Volume 10,413,632Previous Close $ 64.9452 Week High/Low $ 79.94 / $ 56.30Market cap $ 207,589,003,566P/E Ratio 14.45Forward P/E(1y) 15.65Earnings Per Share (EPS) $ 4.57Annualized dividend $ 2

NYSE:WMT

$66.02$1.08(1.66%)

NYSE:TGT$74.61$1.29(1.76%)

NASDAQ:COST$145.79$1.29(0.89%)

Liquidity Analysis

Jan 31,

2016

Jan 31,

2015

Jan 31,

2014

Jan 31,

2013

Jan 31,

2012

Jan 31,

2011Current ratio 0.93 0.97 0.88 0.83 0.88 0.89Quick ratio 0.22 0.24 0.20 0.20 0.20 0.21Cash ratio 0.13 0.14 0.10 0.11 0.11 0.13

Current Ratio Wal-Mart Stores Inc.'s current ratio improved from 2014 to 2015 but then slightly deteriorated from 2015 to 2016.

Quick Ratio Wal-Mart Stores Inc.'s quick ratio improved from 2014 to 2015 but then slightly deteriorated from 2015 to 2016 not reaching 2014 level.

Cash Ratio Wal-Mart Stores Inc.'s cash ratio improved from 2014 to 2015 but then slightly deteriorated from 2015 to 2016.

Source: Based on data from Wal-Mart Stores Inc. Annual Reports

Debt-to-Ratio

Wal-Mart's cash flow-to-debt ratio as of October 2015 is 0.22, meaning its current cash flow could pay 22% of its debt.

Target also has a 0.22 cash flow-to-debt ratio

Costco's is a lower, at 0.16.

Walmart’s Capital Structure – A Mix Of Debt And Equity

Walmart has a mix of debt and equity in its capital structure. The retailer’s total debt, both short and long-term, is ~$56.6 billion. Its debt works out to 69.6% and 27.7% as a percentage of equity and total assets, respectively.

What’s New?

For the first time sharing a 3-year growth plan that includes financial metrics and goals. We project our sales growth over the next three years will be $45 – 60 billion. 

Investments in people and technology to drive strong shareholder returns over time.

Capital investments will be approximately $11.0 billion for fiscal year 2017 and will remain flat in fiscal years 2018 and 2019.  This is below the revised fiscal year 2016 estimate of approximately $12.4 billion, primarily due to a moderation of physical store expansion.

Investments in e-commerce and digital initiatives are expected to total approximately $1.1 billion in fiscal year 2017.  

“Positioned to win the future of retail”.

Capital Budgeting

Shifting some of the decisions involving modular and features back to store operators (10 years ago – store operator autonomy).

Shelf space is critical to all suppliers and with each store manager having their own idea of what customers want, the battle to stay on the shelf could be more intense.

The smaller suppliers will also have to raise up money for merchandisers or do it themselves to ensure their products aren’t squeezed out. (do-your-own marketing).

 Reduced the number of feature and modular changes in stores, ensuring there is space for each feature and associate hours to make the changes (less change, less money spent).

Reduced its supplier marketing funds in an effort to negotiate better every day low pricing from suppliers.

 Changes in contracts with suppliers to “drive consistency and simplification across our business.”

Wal-Mart CEO Doug McMillon hinted at this in February at the company’s year beginning meetings with suppliers.