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Walmart

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    Walmart Walmart Presentation Transcript

    • By: Megan Dow, Kristin Belanger, and Angèle Bourgoin
    • Overview of WAL-MART Presentation
      • Overview of WAL-Mart
      • History
      • Stocks
      • Stock Information
      • The Divisions
      • BCG
      • Their Mission and Vision Statement
      • New Mission and Vision Statement
      • External Opportunities and Threats
        • CPM
        • EFE
      • Internal Strengths and Weaknesses
        • IFE
      • Analysis
        • SWOT Matrix
        • SPACE
        • IE Matrix
        • Grand Strategy Matrix
      • Key Ratios
      • Different Strategies
        • QSPM
      • Decisions
      • EPS/EBIT Analysis
      • Implementation
      • Evaluation
      • Update!
      • References
      • Questions?
    • Overview of Wal-Mart
      • There are 4 different segments
      • Wal-Mart Stores- sales amounted to 64.3%
        • Discount Stores- 1,568 U.S
        • Supercenters- 1,258 U.S
        • Neighborhood Markets- 49 stores U.S
      • Sam’s Club- sales amounted to 13.0%
        • 525 stores U.S
        • Is a member only, cash and carry operations
      • International- sales amounted to 16.7%
        • Discount stores- 942 Sam’s Clubs- 71
        • Supercenters- 238 Neighborhood Market- 37
      • Other- amounted to 6.1%
        • McLane is the nation’s largest distributor of food and merchandise to convenience stores
    • History of Wal-Mart
      • In 1945 Sam Walton opened the first Ben Franklin franchise in Newport Arkansas and operated them with his wife, Helen and brother, Bud.
      • These were small chains that were very successful.
      • In November of 1962 Wal-Mart was opened.
      • Wasn’t until mid 1970’s that Wal-Mart began to grow.
      • 1 st IPO in 1970.
      • Then 100 shares were worth $1,650 dollars and now the same 100 shares are worth more than $6 million dollars.
      • In 1999 named #1 stock on the Dow.
    • History
      • 1987
        • 2 new concept implemented
          • Hypermarkets, which sell everything including food
          • Supercenters which are scaled down supermarkets
      • Also David Glass named new CEO of Wal-Mart
      • In 1992 Sam Walton Died and in 1996 Bud Walton died.
        • In 1995 Wal-Mart’s Annual Report was dedicated to Bud.
      • New president and CEO H. Lee Scott states that “While our history is rich with success, there’s no question that our best years are yet to come.”
    • WAL-MART Years since started
    • Important People
      • Co-founders, Sam and James “Bud” Walton started 1 st Wal-Mart in Rogers, Arkansas, 1962
      • David Glass was named president 1984, in 1988 he became chief executive officer
      • S. Robson Walton named chairman of the board in 1992
      • President and CEO in 2000- H.Lee Scott
      • Vice President- Laura Philips
    • Important Facts
      • In 2004, we conducted more than 15,000 factory inspections - that's an average of more than 40 a day.
      • We serve more than 138 million customers per week.
      • Wal-Mart employs 1.6 million associates worldwide in more than 3,700 stores in the US and more than 1,500 throughout the rest of the world.
    • WMT
      • Traded on NYSE
      • Symbol WMT
      • Index Membership:
      • Dow Jones Composite
      • Dow Industrials
      • S&P 100
      • S&P 500
      • S&P 1500 Super Comp
      • Sector: Services
      • Industry: Discount Variety Stores
    • WMT vs Dow Jones & S&P 500
    • WMT vs Industry
    • WMT 5 years
    • WMT 30 years
    • Stock Splits 4/19/1999 3/19/1999 $ 89.75 0.008057 204800 Mar-99 2/25/1993 2/2/1993 $ 63.63 0.016113 102400 Feb-93 7/6/1990 6/15/1990 $ 62.50 0.032227 51200 Jun-90 7/10/1987 6/19/1987 $ 66.63 0.064453 25600 Jun-87 10/4/1985 9/3/1985 $ 49.75 0.128906 12800 Sep-85 7/8/1983 6/20/1983 $ 81.63 0.257813 6400 Jun-83 7/9/1982 6/21/1982 $ 49.88 0.515625 3200 Jun-82 12/16/1980 11/25/1980 $ 50.00 1.03125 1600 Nov-80 8/22/1975 8/19/1975 $ 23.00 2.0625 800 Aug-75 4/5/1972 3/22/1975 $ 47.50 4.125 400 Mar-72 6/11/1971 5/19/1971 $ 47.00 8.25 200 May-71 Distributed Record Date Market Price on Split Date Cost Per Share Shares 2:1 Stock Splits
    • Stocks 0.51 0.85 N/A 0.46 0.61 P/S (ttm): 1.07 0.96 N/A 1.72 0.99 PEG (5 yr expected): 17.08 19.08 N/A 24.97 17.30 P/E (ttm): 1.16 2.708 N/A 2.215 2.682 EPS (ttm): 128.53M 2.41B 1.11B 1 1.08B 11.23B Net Income (ttm): 6.37% 8.22% N/A 2.79% 5.93% Oper Margins (ttm): 268.09M 5.73B N/A 2.06B 23.25B EBITDA (ttm): 28.72% 32.15% N/A 12.37% 23.06% Gross Margin (ttm): 3.63B 52.62B 19.70B 1 55.68B 312.43B Revenue (ttm): 9.60% 11.50% N/A 11.00% 8.60% Qtrly Rev Growth (yoy): 18.62K 338,000 133,000 1 60,500 1,800,000 Employ­ees: 1.84B 45.01B N/A 26.06B 193.36B Market Cap: Industry TGT Pvt1 COST WMT 1 = As of 2005   Industry = Discount, Variety Stores TGT = Target Corp. Pvt1 = Kmart Corporation (subsidiary or division) COST = Costco Wholesale Corp.
    • Their Mission Statement
      • They don’t have a formal mission statement
      • They are most interested in the customers needs
      • The culture consists of
        • Respect for the individual
        • Service to our customers
        • Strive for excellence
      • If they did have a formal mission statement it would be,
      • “ To provide quality products at an everyday low price
      • and with extended Customer service…always.”
    • Mission Statement
    • Their Vision Statement
      • "The secret of successful retailing is to give your customers what they want. And really, if you think about it from your point of view as a customer, you want everything: a wide assortment of good-quality merchandise; the lowest possible prices; guaranteed satisfaction with what you buy; friendly, knowledgeable service; convenient hours; free parking; a pleasant shopping experience."
      • - Sam Walton (1918-1992)
    • New Mission Statement
      • Our mission is to provide goods and services for our customers at everyday low prices. With our innovative technology we strive to have merchandise ranging from food, clothes, music, etc. on hand 24 hours a day 7 days a week. We are committed to the growth of Wal-Mart and challenge ourselves to be better. We strive to have the best, be the best, and provide quality and assurance to our customers. Our employees are a huge asset to our company, and we would not be the company we are today without them. They have a huge impact on what our company was, what it is, and what it will be. We also feel it is important to give generously to those who are less fortunate than others, which is why Wal-Mart donates thousands of dollars a year to different organizations.
    • New Vision Statement
      • Our vision is to provide good quality and services to our customers while remaining the market leader and striving daily to be the most admired company.
    • Divisions of WAL-MART
      • McLane’s
      • Neighborhood Markets
      • International
      • Sam’s Club
      • Supercenters
      • Distribution Centers
    • McLane’s
      • Nations largest distributor of food and merchandise to convenience stores.
      • In 2003 was sold to Berkshire Hathaway, Inc. so Wal-Mart could focus on core retail business.
    • Neighborhood Markets
      • Began in 1998
      • Located in market with Wal-Mart Supercenters
      • Offers customer groceries, pharmaceuticals & general merchandise.
      • Provides 28,000 items to customers.
    • International
      • Wal-Mart expanded so that customers everywhere would associate its name with low cost, best value, greatest selection of quality merchandise and highest standards of customer service.
      • Wal-Mart focused on Global Positioning.
    • Sam’s Club
      • Membership-only, cash-and-carry operations.
      • Financial service credit card program (Discover Card) available at all clubs.
      • Annual membership fee is $35; the Elite Membership is $100.
        • Elite membership has additional benefits like automotive service contracts, roadside assistance, home improvement, auto brokering and pharmacy discounts.
      • Bulk displays and name brand merchandise.
    • Worldly Stores 37 71 238 942 International Totals 0 0 10 248 United Kingdom 33 9 1 9 Puerto Rico 0 50 75 472 Mexico 0 0 15 0 Korea 0 0 94 0 Germany 2 4 20 0 China 0 0 0 213 Canada 2 8 12 0 Brazil 0 0 11 0 Argentina NEIGHBORHOOD MARKETS SAM'S CLUBS SUPERCENTERS DISCOUNT STORES Country
    • Stores in US and World 86 596 1496 2510 Grand Totals 49 525 1258 1568 U.S. Totals
    • BCG
    • External Factors
    • Key External Factors
      • Opportunities
        • Agreement with Berkshire Hathaway, Inc. acquired McLane Company, Inc.
        • Fortune’s number one Most Admired Company and largest company in nation
        • World’s largest private satellite communication systems
        • Ron Brown Corporate Leadership Award
      • Threats
        • “ Buy American” policy
        • Target
        • A solution to the monopoly that Wal-Mart has created
    • EFE 3.5   1 Totals         0.8 4 0.2 A solution to breaking the monopoly Wal-Mart has created 0.42 3 0.14 Target 0.45 3 0.15 “ Buy American” policy       Threats 0       0.33 3 0.11 Ron Brown Corporate Leadership Award 0.64 4 0.16 World’s largest private satellite communication systems 0.56 4 0.14 Fortune’s number one Most Admired Company and largest company in nation 0.3 3 0.1 Agreement with Berkshire Hathaway, Inc. acquired McLane Company, Inc.       Opportunities   1 to 4 0.0 to 1.0   Weighted Score Rating Weights Key External Factors
    • Internal Factors
    • Key Internal Factors
      • Strengths
        • Stores in all 50 states
        • New concepts:
          • Hypermarkets, supermarkets
        • Wide variety of merchandise
        • Nationally advertised merchandise
        • Limited lines of merchandise – made in USA
        • Point-of-sale bar code scanning
        • Great employee benefits
      • Weaknesses
        • No formal mission statement
        • Management resisted putting women on board of directors
        • Hiring illegal minorities to clean
        • Growth for employees only in division
    • IFE 3.14   1 Totals 0       0.3 3 0.1 Growth for employees only in its division 0.16 2 0.08 Hiring illegal minorities 0.39 3 0.13 Management resisted putting women on board of directors 0.3 3 0.1 No formal mission statement       Internal Weaknesses 0       0.27 3 0.09 Great Employee Benefits 0.52 4 0.13 Point-of-sale bar code scanning 0.24 3 0.08 Nationally advertised merchandise 0.3 3 0.1 Wide variety of merchandise 0.3 3 0.1 New Concepts - Hypermarkets, supermarkets 0.36 4 0.09 Stores in all 50 states       Internal Strengths   1 to 4 0.0 to 1.0   Weighted Score Rating Weights Key Internal Factors
    • SWOT   Find a solution to the monopoly that has been created and come up with a new concept to beat the problem. (S2, T3)   Offer more merchandise that is not apart of the "Buy American" policy to attract more customers (S3, T1)   Use point-of-sale bar code scanning as leverage over competitors like Target (S5, T2) Increase minority sales through buying minority products and selling them in discount stores (T1, W3) Use the Buy American policy to advertise nationally how American Wal-Mart is (S3, T1)       Use the Most Admired Company award as leverage to advertise the wide variety of merchandise (S3, O2) Create mission statements for all of the acquired companies and the different divisions of Wal-Mart (O1, W1) Increase the amount of hypermarkets, supermarkets in 50 states as well as connect to the private satellite systems(S2, SO)
    • CPM 2.14   2.41   3.21   1 Totals 0.15 3 0.1 2 0.15 3 0.05 Management Experience 0.8 2 0.8 2 1.2 3 0.4 Price Competition 0.15 3 0.15 3 0.15 3 0.05 Customer Service 0.5 2 0.75 3 1 4 0.25 Advertising 0.02 2 0.02 2 0.03 3 0.01 Production Capacity 0.04 2 0.06 3 0.06 3 0.02 Organization Structure 0.06 2 0.06 2 0.09 3 0.03 Global Expansion 0.04 2 0.06 3 0.06 3 0.02 Sales Distribution 0.06 2 0.06 2 0.09 3 0.03 Consumer Loyalty 0.1 2 0.15 3 0.15 3 0.05 Product Quality 0.12 3 0.08 2 0.08 2 0.04 Financial Position 0.04 2 0.06 3 0.06 3 0.02 Inventory System 0.06 2 0.06 2 0.09 3 0.03 Market Share   1 to 4   1 to 4   1 to 4 0.0 to 1.0   Weighted Score Rating Weighted Score Rating Weighted Score Rating Weights Critical Success factors Kmart Target Wal-Mart
    • SPACE
    • IE Matrix
    • Grand Strategy Matrix
    • Key Ratios 0.67 (1.50%) Div & Yield: 2.68 EPS (ttm) : 16.98 P/E (ttm) : 189.78B Market Cap: 11,944,400 Avg Vol (3m) : 12,143,600 Volume: 42.31 - 50.87 52wk Range: 45.40 - 45.74 Day's Range: 56.47 1y Target Est: N/A Ask: N/A Bid: 45.62 Open: 45.82 Prev Close:       0.28 (0.61%) Change: 4:00PM ET Trade Time: 45.54 Last Trade: 0.67 (1.50%) Div & Yield: 2.68 EPS (ttm) : 16.98 P/E (ttm) : 189.78B Market Cap: 11,944,400 Avg Vol (3m) : 12,143,600 Volume: 42.31 - 50.87 52wk Range: 45.40 - 45.74 Day's Range:
    • Different Strategies
      • Add more hypermarkets and supermarkets to establish more growth
      • Buy products from other countries to have more of a variety of merchandise and better quality merchandise for customers
    • QSPM 5.26 6 6.78             1   total should be 1.0     0.3 3 0.3 3 0.3 3 0.1   Growth for employees only in its division 0.16 2 0.16 2 0.16 2 0.08   Hiring illegal minorities 0.39 3 0.39 3 0.39 3 0.13 Management resisted putting women on board of directors 0.3 3 0.3 3 0.3 3 0.1   No formal mission statement 0.18 2 0.27 3 0.27 3 0.09   Great Employee Benefits 0.39 3 0.52 4 0.52 4 0.13   Point-of-sale bar code scanning 0.24 3 0.32 4 0.24 3 0.08   Nationally advertised merchandise 0.3 3 0.4 4 0.3 3 0.1   Wide variety of merchandise 0.3 3 0.4 4 0.3 3 0.1   New Concepts - hypermarkets and supermarkets 0.36 4 0.36 4 0.36 4 0.09   Stores in all 50 states   1 to 4   1 to 4   1 to 4         Internal             1 total should be 1.0   0 N/A 0 N/A 0.8 4 0.2 A solution to breaking the monopoly that Wal-Mart has created 0.42 3 0.56 4 0.56 4 0.14   Target 0.6 4 0.45 3 0.45 3 0.15   "Buy American" policy 0.22 2 0.33 3 0.33 3 0.11   Ron Brown Corporate Leadership Award 0.48 3 0.48 3 0.64 4 0.16   World largest private satellight communication systems 0.42 3 0.56 4 0.56 4 0.14 Fortune's number one Most Admired Company and largest company in nation 0.2 2 0.2 2 0.3 3 0.1 Agreement with Berkshire Hathaway, Inc. acquired McLane's Company, Inc.   1 to 4   1 to 4   1 to 4         External TAS AS TAS AS TAS AS Weight       Key factors Buy American More hypermarkets/ supermarket Wal-Mart          
    • Decisions
      • We decided to add more hypermarkets based on the QSPM even though the numbers were close for both strategies
    • EPS/EBIT Analysis
      • Amount needed = $1 Billion
      • Stock Price = $45.54
      • EBIT Range = 435,950 - 635,950
      • Tax Rate = 26%
      • Interest rate = 5%
      • # Shares Outstanding = 4,453,000
    • EPS/EBIT 3.65 3.65 5.64 5.68 EPS 13,964,000 13,964,000 4,453,000 4,453,000 # Shares Outstanding 300,806 438,806 525,553 773,553 EAT 113,347 165,347 113,347 165,347 Taxes 26% 414,153 604,153 638,900 938,900 EBT 21,798 31,798 0 0 Interest 5% 435,950 635,950 435,950 635,950 EBIT (12,719,000 in 2003) Low High Low High Debt Financing Common Stock Financing In $Millions
    • Implementation
      • Begin adding more hypermarkets to towns with populations large enough to support them.
      • Increase the amount of hypermarkets by one in every state (50 stores)
      • Increase revenue by Debt Financing per EPS/EBIT analysis
    • Evaluation
      • Quarterly Reports
      • Yearly Reports
      • Store growth report
      • Annual Sales report
      • Key Ratios
      • Stock prices in comparison to competitors
    • In the News…
      • In 2003 managed to get action lawsuit against Wal-Mart based on so few women being among its managers given that a majority of its workforce is female and also for equal pay. Ended up settling case because didn’t want to lose a case for discrimination because would hurt Wal-Mart’s bottom line. But as the judge rightly ruled, companies that do business on as large a scale as Wal-Mart have to be prepared to answer for their actions on an equally large scale. Case settled in June 2004 and began in September of 2003.
    • In the News…
      • In June 2005 Oklahoma grocer Super H filed lawsuit against Wal-Mart Stores for using a scanner to collect barcode data from the products on the Super H’s Shelves. Wal-Mart allegedly sent workers into Super H to check prices close to the time a Supercenter was opening in August. Super H wants the scanner back, not because of the price information but to make sure that there is not inventory and wholesale prices in the scanner. The real question in this case was not the price scanning but can the scanner capture other information from the scanning tag then just the price. The suit was dismissed per news reports.
    • In the News…
      • In April 2006 a suit was filed against a Wal-Mart in Maryland to ensure that larger employers pay up to a percentage toward health care for employees. ERISA is there to establish a uniform national framework for sponsoring, administering, protecting, and regulating employee benefit plans, including pension plans, and health and welfare plans. ERISA has a broad clause that pre-empts states and municipalities from enacting laws that relate to employee benefits plans. In this case it is not sure if the Maryland law or bills in other states violates the ERISA previsions. In February Wal-Mart announced plans to upgrade its health care benefits. This was decided in the middle of the uproar in this Maryland case.
      • Here are a few cases about Wal-Mart. There were 52 pages of cases if you would like to see more go to Business & Company Resource Center, News/Magazines.
    • In the News…
      • Military Families Outreach Project Partnership with Sesame Workshop to support children of military families.
      • Children's Miracle Network Buy a balloon, save a child's life.
    • Update!
      • International Division
        • 2005 was a busy year for Wal-Mart International. In December alone, the company acquired 545 new stores and gained more than 50,000 new associates in Japan and South America, capping a year of robust growth.
      • Now have 13 divisions within the company
    • References
      • http://www.walmart.com
      • http://finance.yahoo.com
      • Strategic Management Concepts and Cases
      • http://galenet.galegroup.com.prxy6.ursus.maine.edu/servlet/BCRC?locID= maine_fortkent
      • Tony Gauvin’s presentation on Kroger’s
      • http://www.target.com
    • Questions?
      • Thank you for shopping at WAL-MART