Merrill Lynch downgraded Wal-Mart to a "sell" this morning, more humiliation for a management that has already proven that "if it can go wrong, it will go wrong". In the Merrill research note, quoted by MarketWatch, the analyst said: "Following years of weak comps, declining new door productivity and aggressive expense management, margin erosion in the core U.S. division looks set to continue, and may, in fact, accelerate in the years ahead."
That does not leave much wiggle room for the company. Recent reports show that its sales in Mexico and the US Southeast are being hurt by higher Hispanic unemployment brought on by things like the slow housing market.
Wal-Mart probably cannot cut costs much more. With comparable store sales running up 1% to 2%, the company could begin to close some US stores. Right now, the company competes with itself. It has over 1,000 discount stores and 2,300 supercenters in its home market.
And, that is just too many when sales are so slow.
Douglas A. McIntyre
Sponsored: Find a Qualified Financial Advisor
Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.