Wal-Mart Shareholders Need One Question Answered

Wal-Mart Stores' annual shareholders' meeting historically has been more about the star-studded entertainment than any challenges facing the retail giant.

Source: walmart.com

Everyone from Miley Cyrus to American Idol Season 9 winner Lee DeWyze have performed at the Bud Walton Arena in Arkansas, that state where Wal-Mart's headquarters are located. Actor, comedian and singer Jamie Foxx hosted last year's spectacle, which also featured double-dutch jumping unicyclists and belly dancers.

But it will take more than pop icons to overshadow the biggest question concerning Wall Street: When will Wal-Mart's domestic sales recover?

In May, the retail behemoth reported its eighth consecutive quarterly decline in U.S. same-store sales. While this can, in part, be blamed on the difficulties still surrounding Wal-Mart's cash-strapped core shopper, several internal gaffes have also led to the company's struggles at home.

Wal-Mart received significant backlash from shoppers when it removed thousands of items it deemed unprofitable from its shelves through its "Project Impact" initiative. While the company is bringing back some of this merchandise, there's concern in the market that the damage already has been done.

Earlier in the year, Wal-Mart also slightly tarnished its image of being the low-price leader, as surveys showed the price gap between the company and its rival Target were narrowing.

Wal-Mart has refrained from providing a timeline in recent months of when it foresees domestic sales recovering, and investors will be keenly interested in any color from management regarding when turnaround efforts will bear fruit.

Of course, there will surely be some positive, noteworthy discussions from Wal-Mart's management team. Wall Street is awaiting the announcement of a new $15 billion share repurchase plan, according to Goldman Sachs analyst Adrianne Shapira. The company has revealed new buyback plans at three of its last four annual meetings. This program would replace its existing plan, which has $2.7 billion left as of the end of the first quarter.

Wal-Mart will also provide a tour of its Wal-Mart Express store in Gentry, Ark. The small-store formats will be a hot topic during the annual meeting, as Wal-Mart plans on utilizing these locations to expand its reach both domestically and overseas.

The company said during its first-quarter conference call that it plans to open between 15 and 20 Neighborhood Markets, which average 40,000 square feet, and the same number of Express stores, which are about 15,000 square feet.

To maintain its price leadership, Wal-Mart recently launched Walmart-To-Go, a grocery delivery service. It is also expanding its online and social media strategy, with the acquisition of Kosmix, a company it believe will help management better understand and connect to shoppers globally.

There should also be updates on its international strategy, especially on the heels of the approval from the South African Competition Tribunal of Wal-Mart's purchase of Massmart.

But ultimately, the only true catalyst for the stock, according to Shapira, is the return to positive same-store sales. Thus far, the stock has had muted reactions to any of the other perceived catalysts outlined here and will likely have a similar reaction following the annual meeting unless management reveals some tangible improvements regarding sales.


TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

CNBC Data Pages:

Other Discount Retailers:

Family Dollar

Dollar General



TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.