May 24, 2013
Wal-Mart Stores, Inc. (NYSE: WMT) is the world's largest retailer and grocery chain by sales. Wal-Mart is so large that its almost 50% more than its 5 closest competitors combined, including Target (TGT) and Sears Holdings (SHLD). Because of its mammoth size and buying power, Wal-Mart can buy its products at rock-bottom prices, exchanging high purchase volumes for low cost while passing the savings onto its customers. Many suppliers give in to Wal-Mart's pressure because they depend on the discount retailer for a majority of their sales.
Conversely, however, Wal-Mart's reliance on Chinese-made imports makes the company vulnerable to a weakening dollar or strengthening of the Yuan. Wal-Mart purchases billions worth of merchandise directly from China every year with many of its other inventory from companies like Mattel (MAT) coming indirectly from China. In fact, if Wal-Mart were a country, its imports are so substantial that it would be China's sixth largest export country. A stronger Yuan means that Wal-Mart will have to pay more for its merchandise from China, an issue that threatens Wal-Mart's bottom line.
(Read more at Wikinvest
) - Company Overview
- Business Segments
- Wal-Mart Stores (63.8% of Revenue)
- Sam’s Club (11.5% of Revenue)
- Wal-Mart International (24.7% of Revenue)
- Trends and Forces
- Relying on Imports from China Makes Wal-Mart Vulnerable to Currency Rate Changes
- Wal-Mart Low Cost Leadership
- Competition
- Domestic Competitors
- Other Retailers
- International Competitors
- References
