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Wal-Mart (WMT): Sam's Club CEO to Retire; Stock Declines
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Shares of the giant retailer Wal-Mart Stores Inc. (WMT - Free Report) fell 1.3% on Friday after it announced that Rosalind Brewer, the chief executive officer (CEO) of its warehouse chain Sam's Club, will retire next month.
Brewer, who was the first woman and the first African American to hold a top position in Wal-Mart business, will step down on Feb 1. During her five-year tenure as CEO, Sam's Club's sales rose 5.6% to $56.2 billion.
John Furner will replace Brewer as the new CEO of Sam's Club stores. Furner joined Wal-Mart in 1993 and is currently serving as the chief merchandising officer at Sam's Club. He has experience in various capacities, and is most suitable for the role.
Sam's Club, the smallest of Wal-Mart's three business units, operates membership-only warehouse clubs in 48 states in the United States and in Puerto Rico. In the recently reported third-quarter fiscal 2016, Sam’s Club posted net sales growth, including fuel impact, of 1.1% to $14.2 billion. Sam’s Club comps, excluding the impact of fuel sales, improved 1.4% compared with 0.4% growth in the prior-year quarter.The comp sales growth figure was better than the company’s expectations. While comp traffic dipped 0.5%, average ticket increased 1.9%. e-commerce sales positively impacted comps by approximately 0.6% in the quarter.
For the fourth quarter, Wal-Mart expects Sam’s Club comp sales, without the impact of fuel sales, in the range of 1−1.5%.
Notably, the company’s efforts to overhaul its stores, increased investments in technology in order to compete with Amazon.com, Inc. (AMZN - Free Report) and an increase in wages for its workers are weighing on its near-term earnings. The company is grappling with food deflation, stiff competition, aggressive promotional environment and waning store traffic. Nevertheless, the Bentonville, AR-based company is making efforts to understand the growing needs of its customers to regain their confidence, and thus boost sales in the face of increased competition from traditional and online competitors. In fact, the retail giant is leaving no stone unturned to acquire a stake in the online business. In this regard, it continues to make huge investments in e-commerce initiatives, including acquisitions, the recent one being the buyout of ShoeBuy (Read: Wal-Mart to Invest in eCommerce with ShoeBuy Acquisition).
Wal-Mart has remained almost in line with the index since past one year. We note that in the said period the stock has improved 6.3% compared with the Zacks categorized Retail-Supermarkets industry, which grew of 3.2%. We believe that there still much value left in the stock, which is quite evident from its Value score of ‘A’, Growth score of ‘B’, Momentum score of ‘B’ and VGM Score of “A”.
We are also optimistic about its performance in the near term is its low beta of 0.10 and long-term earnings growth rate of 5.3%. Further, the retailer has delivered positive earnings surprises in the past five consecutive quarters.
Wal-Mart Stores, Inc. Price, Consensus and EPS Surprise
While Children’s Place has a long term earnings growth of 10.3%, Tilly’s Inc. has a growth rate of 13.0%.
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Wal-Mart (WMT): Sam's Club CEO to Retire; Stock Declines
Shares of the giant retailer Wal-Mart Stores Inc. (WMT - Free Report) fell 1.3% on Friday after it announced that Rosalind Brewer, the chief executive officer (CEO) of its warehouse chain Sam's Club, will retire next month.
Brewer, who was the first woman and the first African American to hold a top position in Wal-Mart business, will step down on Feb 1. During her five-year tenure as CEO, Sam's Club's sales rose 5.6% to $56.2 billion.
John Furner will replace Brewer as the new CEO of Sam's Club stores. Furner joined Wal-Mart in 1993 and is currently serving as the chief merchandising officer at Sam's Club. He has experience in various capacities, and is most suitable for the role.
Sam's Club, the smallest of Wal-Mart's three business units, operates membership-only warehouse clubs in 48 states in the United States and in Puerto Rico. In the recently reported third-quarter fiscal 2016, Sam’s Club posted net sales growth, including fuel impact, of 1.1% to $14.2 billion. Sam’s Club comps, excluding the impact of fuel sales, improved 1.4% compared with 0.4% growth in the prior-year quarter.The comp sales growth figure was better than the company’s expectations. While comp traffic dipped 0.5%, average ticket increased 1.9%. e-commerce sales positively impacted comps by approximately 0.6% in the quarter.
For the fourth quarter, Wal-Mart expects Sam’s Club comp sales, without the impact of fuel sales, in the range of 1−1.5%.
Notably, the company’s efforts to overhaul its stores, increased investments in technology in order to compete with Amazon.com, Inc. (AMZN - Free Report) and an increase in wages for its workers are weighing on its near-term earnings. The company is grappling with food deflation, stiff competition, aggressive promotional environment and waning store traffic. Nevertheless, the Bentonville, AR-based company is making efforts to understand the growing needs of its customers to regain their confidence, and thus boost sales in the face of increased competition from traditional and online competitors. In fact, the retail giant is leaving no stone unturned to acquire a stake in the online business. In this regard, it continues to make huge investments in e-commerce initiatives, including acquisitions, the recent one being the buyout of ShoeBuy (Read: Wal-Mart to Invest in eCommerce with ShoeBuy Acquisition).
Wal-Mart has remained almost in line with the index since past one year. We note that in the said period the stock has improved 6.3% compared with the Zacks categorized Retail-Supermarkets industry, which grew of 3.2%. We believe that there still much value left in the stock, which is quite evident from its Value score of ‘A’, Growth score of ‘B’, Momentum score of ‘B’ and VGM Score of “A”.
We are also optimistic about its performance in the near term is its low beta of 0.10 and long-term earnings growth rate of 5.3%. Further, the retailer has delivered positive earnings surprises in the past five consecutive quarters.
Wal-Mart Stores, Inc. Price, Consensus and EPS Surprise
Wal-Mart Stores, Inc. Price, Consensus and EPS Surprise | Wal-Mart Stores, Inc. Quote
Stocks to Consider
Wal-Mart currently carries a Zacks Rank #3 (Hold).
Investors interested in the broader retail space may also consider Tilly’s, Inc. (TLYS - Free Report) andThe Children's Place, Inc. (PLCE - Free Report) . Both of them hold a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
While Children’s Place has a long term earnings growth of 10.3%, Tilly’s Inc. has a growth rate of 13.0%.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>