The Inexorable Rise of Walmart? 1988-2016 Harvard Case Solution & Analysis

In October 2015, investors surprised by announcing that it expected flat sales growth for 2015 and increase of just 3% to 4% over the coming three years. Gains would also drop as a result of considerable investments in people and technology. 10% dropped on the news, the largest one day fall since 1998. In February 2016, Walmart reported that earnings for 2015 had reduced from 0.7% to $482.1 billion, the first fall in Walmart's history. The company also reduced its sales forecast for the coming year, which indicated that sales would be constant. Meanwhile, online retailer Amazon was growing fast and, despite being less than one quarter of the size of Walmart, now boasted a higher market capitalization. Additionally, in April 2016, Alibaba of China declared that it had passed Walmart in global sales to become the largest retail platform on earth.

To add to the woes of Walmart, in the USA convenience outlets and traditional dollar discount stores were gaining ground, and wage rises were putting pressure on profits. International markets continued to under perform. Indeed, some analysts had suggested that Walmart refuge to its U.S. home base to enhance performance. Many worried this was the ending of the 50 year inexorable rise of Walmart. However, CEO Doug McMillon stayed decided to get the company back on track and vowed to eschew short-term profits and invest in the foreseeable future. Investors weren't impressed. They had waited a very long time for advancements; yet the stock price had barely changed, and in 2015, Walmart generated three times the sales and profits it'd attained in 1999. Patience was running out.

PUBLICATION DATE: May 11, 2016 PRODUCT #: 716426-HCC-ENG

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