The name of the Company proposed for discussion in this paper is Wal-Mart Stores.
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Wal-Mart has endured itself as one of the major retail outlets in the Americas and also in other countries in the world.
What’s appealing about Wal-Mart?
It has gained prominence as one of the market leaders in the retail trade and has completed streamlined and reinforced its supply chain management network by deliberating pricing below competitive prices, thus gaining a major chunk of the middle-class customers, who may not be able to afford high-cost consumer products for daily use. Also, Wal-Mart has objectives of using internet selling in far-flung areas where it may not be able to sell through stores. It is believed that there is a large untapped internet market waiting to be used.
What’s special about Wal-Mart is that it has over 7800 Wal-Mart stores and Sam’s Club locations in 16 markets on a global basis and provides job opportunities to over 2 million associates and annually serves more than 100 million customers. (About us, (n.d)).
Considering the overwhelming market demand for Wal-Mart products and the fact that it has sustained tremendous growth over the years of successful operation in the Americas and aboard, barring unforeseen circumstances, it is seen that Wal-Mart would definitely be a success in future years.
Financial highlights of Walmart’s
The Net sales of Wal-Mart’s operations for the fiscal year 2008 was $374.5B, operating incomes $220B, and Earnings per Share (EPS) $3.16. Next coming to the aspects of free cash flows, it is seen that the Company has registered a growth rate of 25%, from $4331 to$5,417. (Annual reports, (n.d)). It was during 1970 that Wal-Mart made its first public offering. Its stocks are traded on the New York Stock Exchange. Since the year 1974, we have been paying regular quarterly dividends to our stakeholders. (Stock information, (n.d)).
The stock movement of the Company is being depicted below:
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For the fiscal year ended 31 December 2009, Wal-Mart has paid dividends of $ 0.95 per share payable in quarterly Installments. (Investors frequently asked questions, (n.d)).
Sale of shares after one year
We shall consider the purchase of 1000 stocks of Wal-Mart on 31st December 2007, when the closing price was $ 47.53. When it is sold on 31st December 2008, the closing price is $56.06. Thus, the increase in stock price is $56.06-47.53 = $8.53. Thus, it is reckoned that there has been a profit of $ 8.53 on every share sold on this date. (Investment calculator, (n.d)).
As far as the recent price of the Wal-Mart share is considered, it is seen that it stands at $52.57 on 28.03.2009.
It is seen that Turnover for the fourth quarter of the fiscal year 2009 was approximately $108 billion, an increase of 1.7 percent over the fourth quarter of the fiscal year 2008. Again, Turnover for the fiscal year was approximately $401.2 billion, an increase of 7.2 percent over the fiscal year 2008. Income from continuing operations increased 3.0 percent to approximately $13.3 billion, up from approximately $12.9 billion in the prior year. (Financial, (n.d)).
Now coming to return, it could be said to be the return that arises out of two factors- Capital appreciation and dividend payouts.
A simple illustration of holding out for one year would be as follows:
- Purchase price: 100 [email protected] $25/share
- Dividends payout = $20 (0.20 cents X 100 shares)
- Selling price per share at the end of one year = $30
Therefore returns could be – Capital appreciation + dividend payout
= $500 (3000-2500) + 20 = 520.
Rate of return = 520/ 2500 = 0.208.
Composition of the top Management of Wal-Mart Stores
Founder of Wal-Mart – Mr. Sam Walton.
President and CEO of Wal-Mart stores – Mike Duke
President and CEO of Wal-Mart International – Doug Mc Millon.
The main reason why Wal-Mart has succeeded in the online marketplace has been its relative pricing which is lower than other brands, and also it caters to the needs of a large lower-middle-class section of consumers, who would like to buy goods at economical rates than what is available in physical stores. Wal-Mart has reached tremendous success in catering to this market. It is seen that the management of Wal-Mart is a progressive-minded company that believes that Hard Work and Rewards need to be together. Also, it is concerned about taking good care of its personnel and is not totally profit-driven.
Thus it has several motivational schemes for the workforce and executives and believes that the entire Wal-Mart family, comprising of around two million associates worldwide need to share in its success and reap the bounty of their efforts with guidance and encouragement from the management team. It is believed that in the days to come, Wal-Mart shall cross new frontiers in retail trade and carve a robust niche of the rich business legacy left by its Founder, Mr. Sam Walton.