In the past few quarters, Wal-Mart has struggled to lift its same-store sales despite new initiatives like Project Impact in 2009 intended to improve sales performance. Now Wal-Mart looks to relaunch Everyday Low Prices — though the retail giant has “relaunched” this already several times. This points to Wal-Mart’s difficulty in improving sales metrics due to a flagging economy and partly to consumers opting for dollar stores as a cheaper and more convenient alternative over big box stores like Walmart, Costco and Target. Customers are also shopping more online, which is another area whether Wal-Mart is working on.
We currently have a Trefis price estimate of near $73 for Wal-Mart’s stock, about 40% above the current market price.
We estimate that Wal-Mart’s revenue per square foot from its U.S. stores fell from $442 in 2008 to $425 currently. However, given its scaling power and price leadership, we expect Wal-Mart to bounce back in the coming years. While we estimate Wal-Mart’s revenue per square foot from U.S. stores will increase from $425.40 in 2011 to near $428 by the end of our forecast period, Trefis members indicate an increase from $430 to around $451 during the same period. The member estimates imply an upside of 5% to the Trefis price estimate for Wal-Mart’s stock.
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