Walmart Case Study

Running head: Global Fortune 500 Companies Unit 4 1

Gail Harris

GB540-Economics for Global Decision Makers

Unit 4

Dr. Barbara-Leigh Tonelli

July 1, 2012

Gail Harris Global Fortune 500 Companies 2

History of Wal-Mart

In 1962 Sam Walton, founder of Wal-Mart open his first discount store in Rogers, Arkansas, by 1968 Wal-Mart had stores in other states. On October 31, 1969 Wal-Mart officially incorporated as Wal-Mart Stores Inc. After becoming incorporated Sam Walton decided to travel the country to study everything they could about discount retailing, at that time Mr. Walton was convince consumers was in need of a unique discount store. By 1972 Wal-Mart went public offering stock on the New York Stock Exchange. After going public Wal-Mart retail chain expanded to 276 stores in 11 states by the end of the decade.

In 1983, Sam's Club - store open this was a membership warehouse store. The next major spinoff of Wal-Mart was the opening of Supercenter in 1988. The Supercenter offers the consumers a complete line of groceries, and 36 departments of general merchandise. The next year Wal-Mart had opened 1,402 Wal-Mart stores, and 123 Sam's Club locations. The job opportunities at Wal-Mart has had increased tenfold, sales increased from $1 billion at the beginning of 1980, to $26 billion by the end of this decade. By the 21st century Wal-Mart had become one of the most successful retailers in the world. Currently Wal-Mart has 10,185 stores and club in 27 other countries, and employs over 2.2 million associates, serving more than 176 million customers annually.

Gail Harris Global Fortune 500 Companies Unit 4 3

Recent Operating Results

Wal-Mart Stores Inc. quarterly report, which ended October 31, 2011, reports that the corporation had a market cap of $201.66 billion. The shares were traded around $58.51 with a P/E ratio of 13.3%, and P/S ratio of 0.5%. Wal-Mart dividend yield of Stores stocks was at 2.5%., and the corporation had an annual average earnings growth of 11.1% over the past 10 years ranking a 5-star business according to Guru Focus.

Current Operating Results

For the second quarter of 2012 Wal-Mart earnings per share of $1.09 from operations this year this amount is a 12.4% increase from the previous year. Wal-Mart net sales have increased from 5.5% to $108.6 billion. The corporation total United States. Comps sales, without fuel, were flat for the 13-week period, but Sam's Club comps, without fuel, and was up 5%, Wal-Mart United States delivered comp sales within guidance was at negative 0.9%,. The corporation international reported its net sales of $30 billion, which was a strong 16.2% increase. This increase shows that the Wal-Mart internationally grew through two significant acquisitions. Wal-Mart consolidated operating income did increased to 3.1% this allowed the corporation to end the second quarter of 2012 with a free cash flow of $4 billion, and a. return of $2.7 billion to shareholders. Finally Wal-Mart operating expenses in the second quarter of 2012 grew at the same rate as the corporation sales.

Gail Harris Global Fortune 500 Companies Unit 4. 4

Economic Force Effects

Puget Sound Sage a Seattle advocacy group stated that if a new Wal-Mart store opens in the area it would cost that community $13 million in economic activity, and $14.5 million in lost wages over the next 20 years. The research study predicts that the new Wal-Mart will take business away from other local retailers in the areas, and offer lower paying wages to the workers who was has to find work at Wal-Mart. Another study shows that Wal-Mart has a different outlook on how the community will save money by shopping at Wal-Mart because of the low cost for goods.

Social Force Effects

Wal-Mart is known in the community as the retailer that offers the lowest prices. The formula Wal-Mart use is buy cheap, sell for less than the competitors while making make a profit on high volume sales with a fast turnover. The social effects Wal-Mart have on the community is its focus only on one stakeholder the consumers. By Wal-Mart only concern about satisfying the consumers they have neglected their workers, the community,