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Can Wal-Mart Pull It Off?


If Wal-Mart can customize its stores to fit very diverse local tastes around the globe, I believe it can pull it off in the United States.

Wal-Mart (WMT) reported good numbers today. They were good all around but the hallmark of the first quarter was inventory. It rose only 2% while sales have risen 12.7% - a remarkable achievement, saving the company $2 billion - a lot of money even for Wal-Mart.

Aside from a very attractive valuation, Wal-Mart is trading at about 16 times 2006 earnings, the whole premise of my article relied on one very important assumption: Wal-Mart will be successful at customizing its stores in the United States to appeal to the demographic it serves. Can it really pull it off? As I mentioned in my article about 20% of Wal-Mart's sales come from outside of the United Sates where people speak different languages, have different food preferences, listen to different music, celebrate different holidays - much like the United States and a lot more.

Wal-Mart has adapted its stores overseas to very diverse local tastes, not without mishaps at first (otherwise it would not be Wal-Mart). Degrees of success are different from country to country, but one thing is evident, Wal-Mart's international performance has been consistently improving. If Wal-Mart can customize its stores to fit very diverse local tastes around the globe, I believe it can pull it off in the United States.

Some readers asked me if I shop in Wal-Mart (do I walk the talk). Yes and quite a lot. We moved to a new house about two years ago which is about half a mile from a Wal-Mart Supercenter. I found myself shopping at Wal-Mart at least a couple of times a week. I buy mostly groceries, staples and pharmaceuticals – the lower margin products. However, I'd cross the aisle in a heartbeat if they had a better offering in household items and electronics – higher margin products. I accidentally bought a very nice gold necklace for my wife while I was buying her flowers at Wal-Mart for Mother's Day. Gold is gold and my wife loved it!
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Position in WMT

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