After what seemed to be a never ending series of missteps, WalMart (WMT) would seem to be getting it mojo back. On Wednesday, WalMart.com CEO Raul Vasquez said the company's "Site to Store" program that lets shoppers order online and ship for free to nearby stores was very successful. Yesterdays same store sales results, gave a whole lot of credence to those remarks. Sales of flat panel televisions, MP3 players, video game hardware and accessories, laptops and desktop computers had significant year-over-year gains. Computer sales were fueled by the introduction of select Dell computers now sold at WalMart stores and Sam’s Clubs throughout the United States. Less than a month ago I commented on the significance of the Dell (DELL) move and it seems to be a winner.
For months prior to recent events, investors including yours truly had been screaming for a reduction in new store growth and a meaningful share buyback. At the annual meeting in June executives finally acknowledged they are no longer a growth company and have scaled back those plans and announced a $15 billion share repurchase plan. Yet, the stock had been stagnant as investors waited to see the results of their actions. The answer came today and investor liked those results.
The final piece of the WalMart gripe is clothing. To be frank, virtually every other retailer trounces WalMart here. Whether it be JC Penny (JCP), Target (TGT), Sears (SHLD), or Macy's (M), WalMart offerings are woefully inadequate in comparison. The questions begs to be asked, what would happen to sales if they ever got clothing right? The answer should make investors salivate.
Maybe we have the beginnings of something here now. WalMart has agreed to a 12-year lease for a new 47,000 sq. ft. studio in Manhattan that will replace two nearby studios that combined are only a fraction of the new one. This demonstrates a long-term commitment by WalMart to attract more top talent to pick and design its fashions that had been hampered by the location of WalMart's headquarters in Bentonville. It seems they now recognize Bentonville, while a very nice community is not a particularly big attraction for those in the fashion scene.
This event, while not very widely reported may be the most significant move they have made long term to date. Along with slowing store expansion, many of us begged them to invest in apparel and get it right. This is a first and a huge step. WalMart, who can squeeze a profit out of a penny like no other retailer will not let this sit for 12 years and not produce. They are going to put the money necessary into it to make it work. Locating the facility in NYC will give them access to top and upcoming talent that being in Bentonville just prohibited.
While nothing is certain, WalMart is on a roll recently and the potential for this move to pay off is staggering. If people ever though of WalMart for quality and stylish clothing instead of just cheap, company sales would explode. For proof just look what the Dell move did for their electronics sales almost immediately.
The stock buyback, the slowed expansion plans, the Moneycenter announcement, selling Dell's , the Site -to -Store program all have been great moves and Thursday's results mean that their effects are beginning to show up on the bottom line.
I said before that WalMart was getting real hard not to buy and I did just that only a few days later. Now I am saying that it is real hard not to buy more.