Walmart (WMT) is the world’s biggest retailer, and certainly has scale and reach. But stability is not growth — and if investors can get a comparable dividend elsewhere, why mess with Walmart?
In its May earnings, Walmart U.S. saw same-store sales slip for the first time in almost two years — an uncomfortable reminder of the bleak run from 2009 to 2011 that featured an ugly streak of nine consecutive quarters of same-store sales declines.
And then in August, the company posted another earnings disaster as sales slumped again.
Heavy spending to enter overseas markets must begin paying off, or else the narrative of sales struggles will persist — since the unfortunate reality is soft sales at Walmart might be indicative of broader consumer troubles beyond localized issues that WMT can control.
WMT stock has only slightly underperformed in 2013 with 7% returns year-to-date vs. 16% for the S&P 500, so there are worse things in the world than being a Walmart investor this year. But shares are off more than 6% in just under a month — a sign that near-term momentum is very negative and that even this seemingly stable retailer can flop in a hurry, offsetting any cushion from the rather ho-hum 2.6% dividend.