The world's largest retailer announced recently that its Sam's Club was going to get rid of 2,300 workers – about 2% of the membership club's employees – from its payrolls. Sam's Club is responsible for one out of every eight dollars of revenue for Wal-Mart.
This comes after the most recent holiday season made at least one thing clear: online sales are changing the face of retail in America. And, that could be a threat to the likes of Wal-Mart, which caters to price-sensitive consumers.
(Read more: Wal-Mart cuts 2,300 jobs at Sam's Club)
To be sure, retail sales in the US were $5.09 trillion in 2013 up 4.2% compared to 2012. However, online sales are growing at a much fast 10.3% rate and are now at $450 billion. And, a lot of brick-and-mortar sales came about through deep discounts – particularly during the holidays – to compete with online sales.
Portfolio manager John Stephenson of First Asset Investment Management says Wal-Mart has a lot to worry about.
"The company is struggling with so many headwinds," says Stephenson. "Last quarter, same-store sales were down 0.3%."
Stephenson cites weaker sales in Mexico, the UK, and China among the reasons to worry about Wal-Mart.
"And then food, which is 55% of their sales," says Stephenson. "Prices are lower. Corn prices have fallen 40% (over the past year), which is normally a good thing for consumers. But, they're not able to pass through any cost increases. So, again, the revenue line is going to be weak. I'm not expecting much for Wal-Mart."
While Stephenson doesn't expect much from Wal-Mart, Talking Numbers contributor Richard Ross, Global Technical Strategist at Auerbach Grayson, believes otherwise.
"Admittedly, it's not all rainbows and unicorns for the fundamentals of Wal-Mart," says Ross. "But I still see enough in the technicals to recommend holding this stock but buying it here on this pullback."
Ross notes in one chart that Wal-Mart traded within a range of $72 to $79 for much of the last year. After a false breakout above $80 at the start of December, the stock dropped to its current level around $74 and is now sitting on a support line, according to Ross. Using a long-term chart, he shows why he believes Wal-Mart is a buying opportunity, especially in light of the stock's breakout in the last two years above $70.
To see Ross' two charts on Wal-Mart and for more of Stephenson on the company's fundamentals, watch the video above.
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