News Column

Wal-Mart Downgraded After Q4 Loss

February 21, 2014

Associated Press

NEW YORK (AP) The growing list of issues facing Wal-Mart is becoming more of a concern for a Stifel Nicolaus analyst, who downgraded the world's biggest retailer on Friday.

On Thursday Wal-Mart reported a 21 percent decline in its fourth-quarter profit. The company said that the Nov. 1 expiration of a temporary boost in food stamps is hurting its shoppers' ability to spend. It's also caught up in the debate about minimum wages and dealing with increasing competition from dollar stores and grocers. That's in addition to increased taxes, tighter credit and bad winter weather keeping some shoppers away from stores.

David Schick of Stifel Nicolaus said in a client note that the growing pressures comes at a time when Wal-Mart is in a transitional period as some executives settle into their new roles. Among them is Doug McMillon, who took over as CEO on Feb. 1.

The analyst said that while he thinks Wal-Mart has become more realistic about its opportunities, strengths and weaknesses, its list of positives is offset by a much longer list of concerns.

Schick lowered his rating for Wal-Mart Stores Inc. to "Hold" from "Buy."

But Jefferies' Daniel Binder recommends investors stay with Wal-Mart a little longer to see what McMillon can do now that he's at the helm.

"McMillon appears ready to get this business moving in the right direction," he wrote.

Binder maintained a "Buy" rating and price target of $87.

A representative for Wal-Mart of Bentonville, Ark., did not immediately respond to an email seeking comment.

The company's stock fell 30 cents to $73.22 in midday trading.

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Original headline: Analyst: Wal-Mart facing growing list of issues


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