Despite these challenges, Wal-Mart has repeatedly touted its small-format stores as a potential springboard for success—a move that analysts have said is critical in the changing retail environment.
In October, the discounter announced plans to add up to 150 more small stores in 2014. While Wal-Mart has traditionally grown its domestic footprint organically, Credit Suisse analyst Michael Exstein issued a report Wednesday suggesting the world's largest retailer should accelerate its small-format store growth by buying Family Dollar.
(Read more: Time to close Wal-Mart stores? Analysts think so)
Nearly a quarter of Family Dollar stores are in large urban markets, where Wal-Mart has historically had a hard time breaking ground, according to the note. The firm's research also showed Family Dollar locations have the least overlap with Wal-Mart compared with other dollar stores, which would mean a lower risk of a deal being blocked by regulators.
"Wal-Mart has signaled a need to fill the small-format hole in its store portfolio to compete for its core customer in the 'fill-in' trip," Exstein wrote.
Financially, Wal-Mart could buy Family Dollar (Exstein suggested paying a 30 percent premium, or just under $9.5 billion for the company), but MKM's McKeever said some investors want to hear about a slowing of square footage growth, so the retailer can return more cash to shareholders.
(Read more: Wal-Mart adds to gloom, guides 4Q earnings lower)
Despite this noise, Janney Capital Markets' David Strasser said he doesn't believe investors will hear anything dramatic from McMillon on Thursday. Though Strasser acknowledged a confluence of macroeconomic issues are straining the big box retailer's core shopper, he said he's not overly concerned about its near-term future.
"Wal-Mart is going to continue to lead on price, and aren't going to let anybody take that mantle from them," he said. "This is a big ship to turn."
—By CNBC's Courtney Reagan. Follow her on Twitter