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The successful world retailers’ business categories include Wal-Mart Stores (U.S.), Sam's Club (U.S.), and International stores. The International segment yields about 20% of the companies’ overall business income and is responsible for several different types of restaurants and stores including Wal-Mart and Sam's Club in 13
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Due to Wal-Mart’s immense size, they can purchase products in enormous quantities for very low prices, and then pass those low prices to their customers, thereby beating the prices of most rival retailers. This creates a catch-22, or a negative loop, for rival companies, because in order to grow in size they need customers, but Wal-Mart draws customers away from them with their lower prices, and these rivals can’t usually match those prices because they aren’t large enough. In order to compete with Wal-Mart, companies have to find new ways to offer low prices. Online retailers can cut costs by eliminating many expenses associated with a brick-and-mortar business. Costco derives most of its income with its membership fees, and therefore sells its products at nearly the same price it purchased them in order to try to keep prices low. A company like Costco can put up with very low profit margins over a significant period of time in order to gradually grows and pierces the competitive shield of Wal-Mart. Still, Wal-Mart is indeed in a very strong and difficult-to-shake position among …show more content…
The stock may deserve placement as a fairly conservative pick in a dividend-growth portfolio. In my opinion, the stock represents a fairly good value while it remains in the low-to-mid $50s. The business is highly scalable, and if the company can defend its domestic businesses and continue to grow at a reasonable pace internationally, while all the while generating substantial free cash flows used to pay dividends and buy back inexpensive shares, shareholder returns should be healthy and consistent. Due to the predictability of dividends and buybacks, WMT currently grows dividends and EPS like
Due to Wal-Mart’s immense size, they can purchase products in enormous quantities for very low prices, and then pass those low prices to their customers, thereby beating the prices of most rival retailers. This creates a catch-22, or a negative loop, for rival companies, because in order to grow in size they need customers, but Wal-Mart draws customers away from them with their lower prices, and these rivals can’t usually match those prices because they aren’t large enough. In order to compete with Wal-Mart, companies have to find new ways to offer low prices. Online retailers can cut costs by eliminating many expenses associated with a brick-and-mortar business. Costco derives most of its income with its membership fees, and therefore sells its products at nearly the same price it purchased them in order to try to keep prices low. A company like Costco can put up with very low profit margins over a significant period of time in order to gradually grows and pierces the competitive shield of Wal-Mart. Still, Wal-Mart is indeed in a very strong and difficult-to-shake position among …show more content…
The stock may deserve placement as a fairly conservative pick in a dividend-growth portfolio. In my opinion, the stock represents a fairly good value while it remains in the low-to-mid $50s. The business is highly scalable, and if the company can defend its domestic businesses and continue to grow at a reasonable pace internationally, while all the while generating substantial free cash flows used to pay dividends and buy back inexpensive shares, shareholder returns should be healthy and consistent. Due to the predictability of dividends and buybacks, WMT currently grows dividends and EPS like