Walmart Shares Are Hitting New Highs; It Might Be a Good Time To Cash Out

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Male African American cashier helps male Anglo senior citizen at new Wal-Mart store in Austin, Texas ©Marjorie Kamys Cotera
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Walmart (WMT) shares may be closing in on new highs after posting quarterly results on Thursday, but this may also be a good time for investors to head for the register and cash out.

The world's largest retailer's report wasn't all that impressive. Net sales rose just 1.6 percent to $114.9 billion. Despite a 20 percent increase in global online sales and Walmart's seemingly open-ended growth potential overseas, this is a company that is struggling just to keep pace with inflation.

The news gets worse once you look at the U.S. Walmart stores where same-store sales actually declined 0.3 percent during the period.

The shocker is that this isn't the first time that your average Walmart location has failed to live up to its prior year's tally. They've reported negative comps more often than positive periods over the past four years.

The notion that Walmart is an all-weather retailer -- capable of ringing up sales in good times when folks have money to spend and in bad times as affluent shoppers trade down to Walmart -- just isn't holding up in light of the chain's recent years of financial performances.

More Than the Poor

Walmart isn't only for low-income families. The chain claims that 60 percent of the country buys something at Walmart in any given month. You'll find plenty of middle-class and even upper-crust shoppers there getting more bang for their bucks.

However, head out to a Walmart parking lot at midnight at the start of the month and you'll see plenty of low-income families with the government benefits cards that get reloaded monthly with food stamps or nutritional grant aid for young mothers.

Fair or not, Walmart gets lumped in with dollar stores and other deep discounters. It has never managed to pull off what its nearest rival Target (TGT) has done with its "cheap chic" appeal.

It's cool to be seen at Target. You won't find too many people posting Facebook status updates about heading out to Walmart.

Walmart Can't Catch a Break

One would think that it should be Walmart -- and not Target -- donning the bullseye logo at the front of its stores, given that it's such a common target for protestors. Why isn't Walmart paying enough? Where are the employee benefits? Is working at Walmart a dead-end job?

Walmart has answers.

It points out that its wages are at or above the retail industry average, and that 75 percent of its store managers -- earning between $50,000 and $170,000 a year -- started out as hourly associates. Walmart also points out that benefits for qualifying associates include a 401(k) plan with a company match, education assistance, merchandise discounts, and health care with plans starting at $40 a month. The stores also pay out performance bonuses -- even to part-time workers -- that totaled $770 million to hourly associates last year.

Naturally you will find labor groups and mom-and-pop retailers arguing otherwise, but Walmart has grown to become the world's largest retailer by saving consumers as much money as possible on everyday purchases.

However, its not unreasonable to think all of the negative sentiment is weighing on Walmart if its typical U.S. store is selling less than it did a year earlier.

Tomorrow's Showrooming Threat

The showrooming trend that has disrupted consumer electronics chains is starting to work its way to traditional retailers. As cheap as Walmart can be given its size, buying advantages, and low markups, it may not be able to compete with Amazon.com (AMZN) and other e-tailers that don't have to pay for a local presence.

Walmart may have bragged on Thursday about its 20 percent spike in online sales worldwide in its latest quarter, but Amazon's growing even faster.

Walmart is beefing up its e-commerce efforts, and that even includes testing grocery deliveries in Denver. Well, Amazon's all over that, too, recently expanding AmazonFresh beyond its Seattle home base.

Things won't get any easier from here. Walmart has been struggling at the store level for years despite being widely recognized for its low prices. Now the changing face of commerce may threaten Walmart's lone advantage over the competition -- and that's before even considering the digital distribution of media that is giving shoppers fewer reasons to stop by Walmart to pick up new CDs, DVDs, or video games.

If Walmart is just meandering about now, it's going to be hard to keep moving forward at all in the future.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com. Try any of our newsletter services free for 30 days.

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DOUG

I'm sure Wal-Marts profits are up. They cater to the welfare rats leeching off the taxpayer. The more leeches, the more profit for them. Just more proof that goverment freebie programs are in charge. I love all the excuses I have seen why a person cant work while reading the assorted tales of whoa listed on Huffpost. Everyone has an excuse and for some reason they justify their laziness in their mind. Must help them sleep at night I guess. In any case I cant wait until the day there are more welfare leeches than taxpayers which is coming. Guess you freeloaders will have to work or go hungry. Us lowly working folk are tired of you living off us....

November 16 2013 at 1:12 AM Report abuse +2 rate up rate down Reply
ping.willow17

A lot of people had better thank god for a Walmart.
Also windixe supper market, need a much better job try educating your self while working,so you can get a better paying job don't you think? ???

November 15 2013 at 11:54 PM Report abuse -1 rate up rate down Reply
ping.willow17

Ilove Walmart store the company has helped the poor than any other company.

November 15 2013 at 11:38 PM Report abuse -1 rate up rate down Reply
arenadood

I guess all the people who said they would boycott Wallyworld havent gotten around to doing that yet.

November 15 2013 at 5:17 PM Report abuse -1 rate up rate down Reply
parthenon1

I have what might work for the Post Office. I have suggested for some time now that the PO be bankrupted and a consortium of UPS and Fed Ex be set up to handle the postal service. the liberals dont like it but how about asking Walmart to devise a business plan to run the postoffice after bankrupting the PO first.

November 15 2013 at 1:51 PM Report abuse rate up rate down Reply
2 replies to parthenon1's comment
pdbliz

SUPER GOOD POST...............

November 15 2013 at 1:53 PM Report abuse +1 rate up rate down Reply
jmg62

Well, parthenon1 - ya had me until you brought politics into it. Then, you were just another HACK. When were you born? I voted for Reagan, but it's not up to "liberals" or the "Obstructionist" Party - since they couldn't decide to get out of their own way if a train were heading at them not a mile down the track unless Obama stood on the track himself. May as well wait for as Pig to Fly in a Frozen Hell. Read the United Post Office Policy on the Lands and Territories of the United States of America. What YEAR did the GOP GUT the funds from the USPS and with all their legal linguistic maneuverings paid back,...how much? Tweren't the liberals. Like the Medicare Trust Fund - the GOP use it as if it were their own Fiduciary Bastion to Cover All Things Over Budget. Then pay it back - pennies on the dollar. Think Fed-Ex and UPS can deliver to Cohoe, Alaska and maintain a profit? "Handle the postal service"? The EXPANSION alone would bankrupt them - cause sure as shootin' Congress isn't going to just "hand over" the trucks and trains and planes and routes for free! Mahbaum, MA? Think the "CONSORTIUM" WANT'S to have it? Make everyone come to the Town Meetin' and wade through all the letters and packages too once a week! Maybe just on Sunday's?

November 15 2013 at 9:48 PM Report abuse -1 rate up rate down Reply
parthenon1

I am very much amused ! huffington Post has damned, slammed, chastised WalMart all while encouraging protests and demonstrations and all the while they do better and better. I guess there are more of us who believe a startup first job need not break the bank in wages especially when one considers the experience in learning how to work productively. No I dont have any ties to WalMart, no stock ownership and have never worked for them, but i do recognize and appreaciate a good business plan.

November 15 2013 at 1:48 PM Report abuse rate up rate down Reply
1 reply to parthenon1's comment
jmg62

Well, and again parthenon1 - you SHOULD have ties to WalMart since that's where it's at. "More of us who believe a startup FIRST JOB,..."? And the last time you were in a Walmart was when? 40-50 yr old men unloaded trucks with me. I was told I should "work out" to get in shape! 260lbs and 6'? I could throw a line-backer over my shoulder for 3 quarters (hadda let other's play) - but I couldn't keep up with them! Grandmother's tossed 40 lb bags of dog food atop the shelves. Gray-haired ladies worked the cash registers along side me for hours - scanning as per minute what they told us to. Training the FEW young one's (25+) who needed to know to "Walk to The Red Line" - "No Further Than Here" to greet a customer. Etc.. Now? Forget it - there are 3 people working the registers on any given night if they're lucky. "Red Line"? No idea what that is. "Greeting a Customer"? Clueless. Seems easier to make off with something than pay for it - who'd know what "Where's BOB?" means? A cashier would have to SCREAM it down the register aisle. And checking at the door with your receipt? Ha Ha Ha! Hee! Hee Hee! Could have an air conditioner on the bottom of your cart and who'd care? Heck, pull your car around - they'll help you load it in! The elder's care. Not all of those you speak of - now but 23% of the work force - in retail, fast food, hospitality industries. Find out before you laud on about something you obviously don't know anything about. "Startup jobs" - aren't defined by your past rendition of them any longer. Keep cutting Food Stamps so more can go to the Big Farma Producers in the "Farm Bill", - ya know - that 3 year Congressional Manifest? Think that "savings" is going any where YOU want it to go? Take a gander at the new "Gerald R. Ford". Pretty. Powerful. You VOTED for it. Enjoy!

November 15 2013 at 10:13 PM Report abuse -1 rate up rate down Reply
pdbliz

I have never seen so many STUPID WHITES IN MY LIFE.. They are called...DEMOCRATES SOCIALISUM THUGS.

November 15 2013 at 1:32 PM Report abuse -1 rate up rate down Reply
1 reply to pdbliz's comment
parthenon1

I think you will find this fits the Democrats better after all who has more members elected by cead people as well and illegal aliens, felons, as well as having the Black Panthers intimidate white voters and the DOJ refusing to investigate.. . . and you liberals wonder why we are arming ourselves at a surprising rate.

November 15 2013 at 1:54 PM Report abuse -1 rate up rate down Reply
pdbliz

Sounds to me like the Federal Government wants to shut out Walmart.....!!!!
For making ,,PROFITS.!!!!!


LOOK AT THE POST OFFICE,,,,$5 BILLION LOST.!!!!! HELLO.!!!!!!!

November 15 2013 at 1:29 PM Report abuse rate up rate down Reply
mgh406

Sales are down and profits are up. Two reasons are; 1. Employees are being squeezed to the max. 2. They are employing serious covert price creep.

November 15 2013 at 1:20 PM Report abuse -1 rate up rate down Reply
2 replies to mgh406's comment
dweeeb.buster

Covert?

November 15 2013 at 1:35 PM Report abuse rate up rate down Reply
willypfistergash

markets are up...most companies must be engaging in same covert ops

November 15 2013 at 1:58 PM Report abuse +1 rate up rate down Reply
dweeeb.buster

Kudos to Daily Finance for finding a writer with a keen sense of the obvious (said differently, miracles never cease).

Same store sales at many traditional bricks and mortar retailers have been suffering in recent years as creative destruction reshapes how consumers shop. The question is whether traditional retailers will be able to adapt to the new technological realities, and if so, which ones.

November 15 2013 at 9:20 AM Report abuse +1 rate up rate down Reply
1 reply to dweeeb.buster's comment
dweeeb.buster

One caveat to keep in mind is that the market is very good at recognizing these trends, and reflecting them in valuations. As a result, WMT trades at 15 X earnings, while AMZN is valued at 1272 X earnings.

November 15 2013 at 9:46 AM Report abuse +1 rate up rate down Reply
1 reply to dweeeb.buster's comment
willypfistergash

covert pricing ops

November 15 2013 at 1:58 PM Report abuse rate up rate down