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Walmart: 2014 Growth and Affordability


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One of the biggest and most powerful buying hands in the pool of giant U.S. superstores and super-centers, is Walmart. The U.S. retailer finished last year with some pretty strong numbers, and is looking to branch itself out further by investing further into Canada. However as popular as the retailer is, there are still plagued by its own marketing techniques as well as the audience for which it aims to serve, the customer base it caters to. 2014 will have to now be the judge of Walmart’s financial investments abroad as well as at home, while it tries to explore new markets with the same statue of a customer base. The new year may offer the giant retailer growth but it will definitely test its long term standing and affordability.

Walmart Last Year

Walmart last year, overall saw a 4.2% increase in profits. According to financial analysts who are projecting Walmart to gain another 2% in profits by the end of February for restructuring its profit margins. All across the U.S. retailers, saw a jump or at least saw a closeness in their projected profits for the end of the financial. All of this, after the federal government cut back unemployment benefits, food stamps, and retracted the payroll tax exemptions, which had been implemented during the height of the economic downturn. Even with a slight boost in profit, Walmart has been experiencing low stock prices and a struggle to maintain strong sales numbers from the beginning of last year through the end in December, even while consistently out performing every other retailer with the exception of Amazon. The last year has given the retailer the ability to move into the northerly neighbor of the U.S., in order to expand its reach into a market that has been tested. The question then becomes, is Walmart looking to expand its reach for the sake of making a newer profit, or are they risking this type of profit by pushing too hard to make up the difference of what they are losing in the American market?

2014 GrowthWalmart

Even with lowered sales plaguing the company, it hasn’t stopped Walmart with its own vision of growth and expansion. Even in all of our home towns where our local Walmart’s have been, have also been renovating and updating their already established locations. They have even broken into the grocery retail side of retail, and have been bringing in suppliers more than just Coke-a-Cola or Pepsi products. With the start of January and the new financial quarter, Walmart is looking to invest over 500 million Canadian Dollars into building 35 brand new super centers. This expansion, the company believes, will help solidify Walmart’s place in North America, and further their ability to dominate many corners of retail. 35 new super stores combined with the renovating of their current ones, takes on more than a role of modernizing and more of a smart and savvy update that makes traditional outlets seem outdated. 500 million Canadian dollars is roughly the equivalent to 450 million U.S. dollars, which shows the level of commitment that the retailer is putting into the established markets and trying to boost their sales as well as their stock prices.

Affordability

The biggest problem that is hurting Walmart is that their focused market of buyers is changing. What does this mean? It means that while overall sales have jumped slightly, the North American and global economic problems are not only costly to the retailer itself, but to the customer base as well. As unemployment benefits are running out without any type of extension, food stamps are being cut back, and more taxes on income, Walmart like so many of its competitors are finding that their long established customer base is losing the ability to fund shopping in these outlets. The affordability of Walmart has seemingly sunk because of the hard economic conditions.

Walmart has two main factors that are costing the company money and overall worth. The first is the failing stock prices, they are low and costing the company what could be potential investors looking to buy more shares and bump up the overall value of the company. The second issue, is the lack of sales. Now, while we have already discussed, the economy has been putting a squeeze on the customer base for the retailer, what begs the question, is the Canadian in any better shape than that of the U.S. market and can it sustain the demands of profit that Walmart is looking to achieve. The needs of the retailer are seemingly being pressed onto the market it is trying to expand into, and for investors this can be seen as a move of desperation, looking to move forward without fixing, or being able to fix the issue that they are having in their own home market.

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