Walmart Financial Statistics as of 2/26/13 (Rueters, 2013)
Company Industry Sector
Quick Ratio 0.22 0.48 1.18
Current Ratio 0.83 1.13 1.53
Debt to Equity Ratio 70.91 67.73 53.69
Inventory Turnover 8.34 6.64 9.34
Receivables Turnover 73.85 100.36 17.58
Asset Turnover 2.37 2.01 0.96
Profit Margin (5 year avg.) 3.67 2.86 5.84
Return on Assets (5 year avg.) 8.85 6.10 6.43
Return on Equity (5 year avg.) 21.90 15.90 12.05
P/E Ratio 14.03 24.65 14.41
Market to Book 3.15 4.46 1.45
Walmart has efficient inbound logistics. They use the just-in-time inventory to reduce inventory costs. They made their trucks 25% more fuel efficient from 2005 to 2008. Walmart has improved the routing of their trucks to reduce miles. They have tried a new way to load their trucks which allows them to get 3% more product in each load. Walmart plans to double the fuel efficiency of their trucks by 2015 (Walmart, 2009).
Walmart markets their customer segments well. Not all Walmart stores are "one size fits all." Walmart tailors stores specifically for: Hispanics, African Americans, the affluent, empty-nesters, rural resident, and suburban residents (Wikipedia, 2013). They use facebook, twitter, and cellphone apps as marketing tools. Walmart changed it's procurement strategy to buy 80% of their products directly from it's manufacturers compared to the current 20%. This will save Walmart between 5% to 15% on the products they buy (SC Digest, 2010).
Walmart has strong financial tangible resources as they have cash on hand and have good borrowing capacity. Their physical tangible resources include their 4,200 U.S. stores and their 140 distribution centers (Wikipedia, 2013). A strong intangible resource is their specific procedures like their logistics system. Another important intangible resource is their brand name. Walmart's brand name is associated with lower prices.
Walmart needs to work on their organizational capabilities. They struggle to retain human capital due to low pay and not treating everyone fairly, especially women. Walmart needs to improve their customer service. A 2008 study by the University of Michigan concluded Walmart had the worst customer service among American companies (Seeking Alpha, 2008).
Walmart's organizational resources are valuable. The organizational resources have provided Walmart with greater efficiency and effectiveness. Walmart's business is not rare as grocery stores and department stores sell the same products. Many stores have tried to imitate Walmart's low prices and have failed. There are substitutes available for the products they sell including Target, Kmart and Shopko. The problem is their competitors can't match Walmart's low prices.
Reuters. 2013. Retrieved from http://www.reuters.com/finance/stocks/financialHighlights?symbol=WMT.N
SC Digest. 2010. Retrieved from http://www.scdigest.com/Assets/ON/Target/10-01-06-1.php
Seeking Alpha. 2008. Retrieved from http://seekingalpha.com/article/6533-walmart-s-poor-customer-service-has-to-go
Walmart Sustainability Report. 2009. Retrieved from http://www.walmartstores.com/sites/sustainabilityreport/2009/en.logistics.html
Wikipedia. 2013. Retrieved from http://wikipedia.org/wiki/Walmart
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