Wal-Mart Updates: Rocky Few Weeks Cap Off 11% Year
Wal-Mart (NYSE:WMT) capped off 2011 with a modest 11.5% return in share price, which outpaced S&P which ended flat. Among recent initiatives, the retail giant is looking to build its online presence and expand internationally. Wal-Mart competes with other big retailers like Target (NYSE:TGT), Costco (NASDAQ:COST) and Best Buy (NYSE:BBY).
Powdered Milk Problem
Wal-Mart had to withdraw its powder milk formula from its shelves after an infant who was given the formula died from a suspected bacterial infection. According to hospital tests, the infant became infected with the Cronobacter sakazakii bacteria, which can grow in powdered formula. This matter is under investigation by health officials. However, Wal-Mart claims that the batch tested negative for the bacterium before being distributed. [1]
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Boost Online Sales
According to recent reports, Wal-Mart has been aggressively hiring to expand its @WalmartLabs team. [2] The company is trying to leverage social media to drive its sales. Since its inception, @WalmartLabs has been actively scouting for acquisitions. In November, it acquired Grabble, a maker of point of sale technology that ties in with mobile phones.
This time, Wal-Mart offered its Christmas clearance sale on its online platform as well. It also offered free shipping on the items sold in an effort to boost after Christmas sales. Looks like Wal-Mart is leaving no stone unturned to increase its online sales.
Corruption Probe Abroad
In a recent filing with SEC, Wal-Mart disclosed that it has begun an internal investigation into whether certain matters, including permitting, licensing and inspections, were in compliance. It has also engaged outside counsel to assist in the review of these matters. Wal-Mart is investing whether or not certain overseas operations may have violated US anti-corruption laws. However, it has not revealed any further details regarding the same.
Since the probe is still in the early stages, it is still to be seen whether this would have any adverse effect on Wal-Mart’s international operations. According to company officials, the probe would not have any material effect on the company’s operations. However, Wal-Mart’s stock price witnessed a fall of 1%, following the release of the quarterly filing. It is still to be seen to what extent Wal-Mart is struggling with corruption in its overseas operations.
With the sluggish growth in the developed markets, the developing markets have become a key growth driver for Wal-Mart. Presently, its international operations contribute approximately 30% to its gross revenues. Its international store count has witnessed a substantial increase from 2,733 in 2007 to 4,557 in 2011. That roughly means an addition of 360 stores a year.
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