08 April 2009

WMT: Financial Analysis through January 2009 (Update)

We previously posted an analysis of Wal-Mart's (NYSE: WMT) earnings announcement for the quarter that ended on 31 January 2009, which was the fourth quarter of the company's fiscal 2009. 

Wal-Mart later filed its 10-K and Annual Report for 2009 with the SEC, and we updated our analysis to incorporate data that hadn't previously been disclosed.

Discounter Wal-Mart Stores, Inc. had sales over $400 billion, nearly 10 percent of U.S. retail sales, in the fiscal 2009.  It garnered the top spot on the 2008 edition of the Fortune 500 list of America's largest corporations, edging ahead of Exxon Mobil (NYSE: XOM).

Mike Duke, former vice chairman of Wal-Mart International, took over as CEO from Lee Scott on 1 February 2009.  He grabbed the reins when most retailers are struggling.  Holiday sales were down, and one prominent corporate adviser has warned that many large retailers "are at significant risk of filing for bankruptcy or facing financial distress in 2009 or 2010."

Wal-Mart, on the other hand, sells consumer staples that customers find a way to buy even during tough timesEconomies of scale and ruthless efficiencies allow Wal-Mart to keep prices so low that competitors, such as Target (NYSE: TGT), Kohl's (NYSE: KSS), and Sears Holdings (NASDAQ: SHLD), find it difficult to match them. 

The company certainly has its share of critics, some of whom have commented on GCFR analyses.

Wal-Mart announced on 23 December 2008 the settlement of 63 wage and hour class action lawsuits at a cost to the company between $352 million and $640 million.  The results for the January 2009 quarter included a $255 million after-tax charge ($352 million pre-tax) to account for this obligation.

During fiscal 2009, Wal-Mart closed 23 stores in its struggling Seiyu unit in Japan, and it sold the Gazeley Limited Group property development organization in the U.K.

Our gauge scores are only slightly different from those posted earlier.

Our evaluation of the January quarter's Income Statement wasn't affected by the 10-K.

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