Wal-Mart (WMT) stock has declined more than 11% this week.
The stocks decline is due to recent growth projections from Wal-Mart’s 22ndannual meeting for the investment community.
With stock declines of about 10% the day of the meeting, things did not go well.
For some companies (Netflix, Amazon, Tesla, Facebook, etc.) revenue is all that matters (to the investing community). Profits are a distant thought – something that can be achieved one day, after rapid revenue growth is achieved.
Wal-Mart is not judged like those businesses. For Wal-Mart profit matters. That’s a good thing for investors and for Wal-Mart.
After all, Wal-Mart is a Dividend Aristocrat with over 40 years of consecutive dividend increases. You can’t do that unless you focus on profit.
Unfortunately for Wal-Mart, most investors are focused on short-term growth; what can you show me over the next quarter or year?
Wal-Mart could have continued on the path it has been on for the last decade – building new stores, finding new ways to cut costs, and repurchasing shares.
Wal-Mart’s reputation was slowly declining. The company was not seeing significant comparable store sales improvements. Instead of continuing on the same path, the company is repositioning itself.
Here’s what Wal-Mart CEO Doug McMillon had to say about the company’s strategy in their recent investor meeting (emphasis added):
