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Wal-Mart's Troubles Extend Beyond Brazil: Beware The U.K.

Wal-Mart's Troubles Extend Beyond Brazil: Beware The U.K.

Wal-Mart Stores, Inc. (NYSE: WMT) had a rocky 2015, on a steady, downhill slide. That slide comes in at a 23.75 percent decline for the last one-year, during which Wal-Mart saw a 52-week low of $56.30.

Year-to-date, the picture has been less negative, but still quite ugly, with the stock seeing an overall increase of 6.87 percent.

With talks of massive store closures in LatAm against the backdrop of the stock's volatile movements as late, it's of little surprise that Wal-Mart is also suffering in other countries.

'Could The UK Be Less Sacred For WMT?'

In a Morgan Stanley research note out Tuesday, analysts Simeon Gutman and Joshua Siber outline how what once was deemed a "sacred" landscape for Wal-Mart may be experiencing some retail-related sacrilege.

According to the analysts, "The UK, China, Mexico and Canada are regarded as WMT's most important international markets. With Asda's recent struggles in the UK, and an increasingly complex global retail landscape, perhaps no geography should be sacred."

The report continued, laying out the difficulties Wal-Mart's UK supermarket chain, Asda, has experienced as of late.

Related Link: Report: Wal-Mart To Close 60 Stores In Brazil

Concerns Abound

Worst-Performing Top 10 Grocer
Backed by Kantar Worldpanel data, Morgan Stanley commented, "The data implies a same store sales decline of 6 percent, 540 bps of underperformance versus the market […] Asda is facing among the greatest top-line pressure of any UK grocer."

Decline Rate Is Accelerating
Furthermore, the research firm stated, "The concern with Asda is not just a poor Q1 trend, but the rate of sales/share decline seems to be accelerating despite easier comparisons."

Ratings And Justification

Citing the juxtaposition of UK being one of "WMT's more important international markets," at an estimated 28 percent sales and 7 percent total sales, with the acknowledged "difficulty of managing a global enterprise in a challenging and rapidly evolving retail environment," Morgan Stanley has an Equal-Weight rating on Wal-Mart with an attached $65 price target.

At the time of this writing, Wal-Mart was trading down 3 percent on the day at $64.89.

Latest Ratings for WMT

Feb 2021Morgan StanleyMaintainsOverweight
Feb 2021Morgan StanleyMaintainsOverweight
Feb 2021Raymond JamesMaintainsOutperform

View More Analyst Ratings for WMT
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