Boston, MA 02/03/2014 (wallstreetpr) – Wal-Mart Stores Inc (NYSE:WMT) and its ilk had a lot to complain during the last quarter. The verdict is nearly out, the last quarter; containing the very crucial holiday shopping fest did not go down as expected by the brick-and-mortar retail chains.
The Causes:
The causes for this bad performance were many. One foremost reason citied by Wal-Mart Stores Inc (NYSE:WMT)’s executive may really have had a bearing. The quarter witnessed about eight major winter storms across the U.S. and that could have affected most of the brick-and-mortar retail chains. This may have also encouraged people to go online for their shopping needs, but that is a different matter. A growing trend towards online trading was discernible even before the season started; driven by lower prices, higher discounts and free shipping and discounts offered by the online retailers. The other issue, again of importance to those dealing in food and beverages was the reduction in the government’s SNAP (Supplemental Nutrition Assistance Program), beginning of November, 2013. These benefits cannot be claimed from the online stores and the pure brick-and-mortar stores were the sole beneficiaries of this program. A reduction in the benefits meant lower sales revenues.
The Effect On Wal-Mart:
Wal-Mart Stores Inc (NYSE:WMT) also has been affected by both the issues. Apart from these issues, the company has been hit by store closures in China and Brazil. Even its operations in India are at a very critical stage; it has broken off its long standing partnership with a local partner and wants to go alone. After all, the recent policy decision of the Indian government was found to favor FDI in retail. The recent setbacks in India stem from the unpopularity of this move; successive state governments have moved to block such retail chains in their respective states. Wal-Mart will be declaring its full fiscal 2013 and fourth quarter financial results on February 20, 2014.
Even before the results are out, these companies are running to take corrective measures. They are announcing lay-offs and store closures. Shares have tanked and the talk has left investors very jittery. But the real smart ones are on the look out of valuations and it may not be surprising if they are stock piling the stocks at each dips.
