Walmart's stock performance and corporate strategy effectiveness

¶ … Walmart's Stock Performance

Today, the largest retailer in the world is Walmart, with more than 11,000 stores in 27 countries (Walmart profile, 2014). Founded in 1945 and headquartered in Bentonville, Arkansas, Walmart operates its chain of retail stores using various formats, including discount stores, supermarkets, hypermarkets, supercenters, warehouse clubs, apparel stores, restaurants, drug stores, and convenience stores, as well as various retail Websites including walmart.com and samsclub.com (Walmart profile, 2014). This paper provides an evaluation of Walmart's stock performance in recent years, and recommendations concerning the company's future direction. A summary of the research and important findings concerning these issues are provided in the conclusion.

Review and Discussion

Since 1995, Walmart has been a top-four Fortune 500 company and from 2002 to 2005, was ranked first as well as again in 2007 (Souza & Awasthi, 2009). According to Souza and Awashti, Walmart's success is "attributed to a few relentlessly implemented directives such as 'always low prices,' investing in little towns ignored by everyone else, and saturating an area by spreading out then filling in" (2009, p. 37). To date, this corporate strategy has proven enormously effective as reflected in the company's stock performance over the past 20 years to date which is depicted in Figure 1 below.

Figure 1. Stock Performance of Walmart: Past 20 Years to Date

Source: Yahoo! Finance at http://chart.finance.yahoo.com/

As can be discerned from Figure 1 above, Walmart has enjoyed a relatively stable increase in its stock performance since early 2000, with some minor declines experienced during 2009 reflecting the lingering aftereffects of the Great Recession of 2008. Some industry analysts, though, maintain that Walmart's stock has not improved as fast as it should have given the company's aggressive growth in the past (Souza & Awashti, 2009). Nevertheless, the company has experienced a steady increase in stock performance since mid-2009 and current projections by many industry analysts suggest this growth will continue in the future.

This healthy growth, though, has not been an accident but has rather been the result of marketers at Walmart keeping close track of changes in consumer demand in the various markets in which it competes. In particular, Walmart has recognized the increasing consumer demand for "healthy foods" in its domestic and international markets. In this regard, Zapata and Detre (2012) report that, "Food processors and retailers like Walmart have taken notice of this trend and have introduced their own organic product lines" (p. 340). Moreover, since 2002, Walmart has been lauded for its comprehensive risk management processes that are based on key performance indicators (Gates & Nicolas, 2012).

Conclusion

The research showed that in just 70 years, Walmart leveraged its modest beginnings to become the world's largest retailer with far-flung operations in 27 countries and more than 11,000 retail stores, as well as several retail websites. The company's stock price has more than quadrupled over the past 25 years. Despite some modest declines in stock performance following the Great Recession of 2008, the research also showed that Walmart's stock performance continues to improve, although not as fast as some industry analysts believe it should. In the final analysis, it is reasonable to conclude that stock portfolios that include Walmart stock will outperform those that do not.