Rising wages, shrinkage and good old fashioned competition all contributed to Wal-Mart's (WMT) rough year. FOXBusiness.com, with the help of the WSJ Market Data Group, crunched the numbers.
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1. Wal-Mart's Stock Has Worst Year Since 1974
Wal-Mart investors began the year on a high note. The stock hit a record $90.47 per share on January 8, 2015. Over the past year the stock has tumbled about 30%, making 2015 the worst year since 1974. The company has lost nearly $80 billion in market value this year. Morningstar's Philip Gorham does see a silver lining. On Tuesday, December 29 he noted that "Wal-Mart's earnings power has been underappreciated," in his research note on the consumer sector.
2. Wal-Mart Keeps Lid on DJIA
The Dow Jones Industrial Average is on pace to end 2015 marginally lower and Wal-Mart is partly to blame. The retailer is the worst Dow member of the year and has shaved 166 points off the index.
3. Wal-Mart Lost $21 Billion - The Worst Day of 2015
Wednesday October 14, 2015 was one of the worst days on record for Wal-Mart. Shares tumbled 10% or 6.70 points, the worst point drop ever. The battering erased $21 billion in market value. As reported by FOXBusiness.com, investors revolted after Chief Financial Officer Charles Holley lowered the boom at its annual investor day at the New York Stock Exchange (ICE), disclosing that profits will decline between 6% and 12% in fiscal 2017. The consensus was for a drop of 4%. He also stated that 75% of the reduction was tied to higher wages.
You may recall, earlier this year, Wal-Mart led the charge in raising wages for about 500,000 workers. In April, workers started receiving $9 an hour and pay may get bumped to $10 next year. Over the next two years this will cost the company nearly $3 billion, according to Holley.
4. Shrinkage Problem
As Wal-Mart pays higher wages, it is also struggling with rising shrinkage. Simply, this is loss of inventory, which can occur from events such as shoplifting or employee theft. On the company's third-quarter earnings call, President and CEO of Walmart U.S. Greg Foran said his team is working to address the problem: "We are pleased with our efforts thus far on addressing shrink, which has been a significant headwind for us this year."
5. Game Changing Year for Retail
Part of Wal-Mart's challenges can be directly linked to Amazon's (AMZN) success. The online retailer, which sells just about everything, rolled out some game changing moves this holiday shopping season [among other things] such as starting holiday sales in early November. The moves are paying off: Amazon is killing it, grabbing 39% of the retail market compared to many of its rivals, according to data compiled by Slice Intelligence provided to FOXBusiness.com. Investors have taken notice. The shares have gained over 120% this year, making the stock one of the top performers in the S&P 500 (SPY).
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