Belus Capital Initiates Coverage on Wal-Mart; Sozzi Says Sell

In a note released Thursday, Belus Capital CEO and Chief Equities Strategist initiated coverage on Wal-Mart

with a Sell rating and a $71 price target. Sozzi wrote, "lately, there has been this creepy emotion inside of me that the company is headed towards a dark place, brought into existence by the evolving game of retailing and Walmart's own initiatives to stay competitive in this eat or be eaten ecosystem." He went on to acknowledge that his research note doesn't contain the typical forward looking estimate on items such as mobile consumption growth or performance forecasts for Wal-Mart China. However, what he did have to say included, "Wal-Mart is in the most disturbing fundamental position perhaps in its storied history," and, "Billions of dollars poured into reducing prices for Walmart Moms and Walmart Dads in key merchandise categories during the past two years has not translated into reignited same-store sales growth at supercenters." In fact, Sozzi noted the company has actually posted declining U.S. same-store sales for the past 5 quarters in a row. How can the company fix this? Sozzi suggest that Wal-Mart needs to enact a "global restructuring plan to scrub the business of underperforming assets". As part of this restructuring plan, Sozzi says the company needs to forgo the lavish annual shareholder meeting and instead go on a "grassroots intelligence-finding mission". This mission would include local town hall meetings in which the company could reconnect with its customers. To support his claims, Sozzi included a chart in his report that contained declining metrics such as year-over-year sales growth, operating margin, and non-GAAP ROI and ROA. of course a noted from Sozzi would not be complete without the accompaniment of a in-store Vine

.