Tomahawk, WI 9/16/2013 (BasicsMedia) – Wal-Mart Stores, Inc. (NYSE:WMT) already enjoys a solid presence not only in the U.S but also around the globe. Its retail stores are recognized all over the world, since this is one of the major brands in the world. The company has what it refers to as the pricing philosophy known as the Everyday Low Prices, abbreviated as EDLP. Under this strategy, WMT ensures that its items are priced low so that as many consumers as possible are able to afford them. It also operates online retail operations through the website. How is it increasing its sales?


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Why is WMT Strategy working for it and not other companies?

WMT has continued to maintain its profitability through a number of deliberately taken steps. It is difficult to imagine if it would have been half as successful if it not put these measures in place and embarked on the path highlighted here. WMT has deliberately decided to continue opening new stores and this appears to be helping it achieve its goal thus far. Better yet, the company has deemed it fit to continue expanding its presence outside the U.S, which has played a massive role in improving its profitability, through increased sales and revenue.

According to the second quarter 2013 results, Wal-Mart now has 4,092 stores in the U.S, compared to 6,242 International stores and 621 Sam’s Clubs. The Q2 of 2012 results indicate that the company had 3,913 U.S stores, 5,825 International stores and 613 Sam’s Clubs. The International segment reported the fastest level of growth based on these figures at 7.2%. In terms of sales, the U.S stores proved to be the most profitable at around 8%, while Sam’s Clubs reported an increase in profit of around 3.8%. International stores had the best net sales growth.

However, of greater concern is the fact that the increase in sales based on the second quarter of 2013 financial results, has been attributed solely to the company’s focus on increasing the number of its stores everywhere. Breaking this down, what it means is that in the absence of the increased number of stores, there is little to show whether WMT would still have reported similar levels of revenue and profits. My opinion is that the company would have struggled to attract the revenues it has posted for the second quarter of 2013.

How does WMT’s Performance Compare with its competitors?

Wal-Mart has performed better than some of its competitors such as Target Corporation (NYSE: TGT). However, it has not performed better than other competitors such as Costco Wholesale Corporation (NSDAQ: COST) based on the factors listed in the previous paragraph. What is not in doubt is the fact that WMT is the most profitable venture when compared against most of its competition. It may be behind other companies based on growth in sales as well as operating profit per store, but it is still the king in terms of profitability.

Based on the factors listed above, I think that WMT never performed as gloriously as others have been made to believe. However, based purely on profitability, no one can match what WMT has posted for Q2 of 2013.

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