Walmart

Introduction

Wal-Mart may be one of the most recognizable establishments in America. Indeed, one has to come across an American who is not familiar with the chain of retail stores. It is consist of thousands of retail stores, selling items at a discount to consumers. Since its inception in 1962, the company has grown exponentially, in terms of sales and brick and mortar branches put up across 50 states of the USA and even in Puerto Rico. The company also has branches (under other names) in the UK, Mexico, Japan and India.

As of January 31, 2010, according to the company’s annual report, the company is a $171 billion enterprise with $450 billion annual gross revenues. With such staggering numbers come larger responsibilities to one’s shareholders. Wal-Mart, being a publicly traded corporation has a duty to increase shareholder’s wealth on an annual basis. This paper shall discuss how Wal-Mart has pleased or displeased its shareholders over the p of three years.

At first glance, it appears that such numbers are overwhelmingly good. Over the years, the company has been doing well. The increase in a corporation’s net income can be attributable to three factors: increase in revenue and/or decrease in expenses or both. For Wal-Mart, Net sales increased by 1% from 2009-2010, and by 7.3% from 2008-2009 (2010 Annual Report, p.15). This increase, though small still remains an addition to income, however, management should delve deeper as this may be a cause of concern.

According to My Hot Topics (2010), this increase is the lowest net sales increase for Wal-Mart in company history. It is noteworthy to point out that Wal-Mart (USA) sales’ have actually fluctuated by 0.7% in 2010 as compared 2009, while it has posted an increase of 3.5% from 2008 to 2009 (2010 Annual Report, p.15). Sam’s Club is not faring any better, with net sales declining by 0.7% from 2009 going to 2010 as compared to the posted 3.2% increase from 2008 to 2009 (2010 Annual Report, p.15). The posted 1% increase in consolidated Net Sales came from Wal-Mart operations out of the USA.

In 2010, Wal-Mart opened 52 new stores as opposed to 106 new stores opened in 2009 and 154 stores established in 2007 (My Hot Topics 2010). The company admits that by expanding by opening new stores, the company, in effect, is in competition with itself as it is “cannibalizing” sales of nearby Wal-Mart establishments. As such, it is opening less and less stores over the years and focusing instead on making the current stores better. Another growing concern of management is the demand of the consumer. Perhaps, given the recession the USA is in, consumers are willing to spend less and less every time they visit as opposed to previous years.

One segment that can alleviate the investors’ concern regarding this Net Sales issue is the increase of the company’s gross profit margin to 24.8% from 2009 to 2010 as opposed to 24.2% from 2008 to 2009 (2010 Annual Report, p.15). This only means that despite the incredibly minimal increase in net sales, the company has found a way to decrease its cost of sales that it still allows for a noticeable increase in gross profit.

In 2010, the company’s advertising expenses grew by 14%, with total operating expenses growing by 2.7% compared to 2009 (2010 Annual Report, p.18). The company attributes the growth to higher costs of health care, restructuring charges and the aforementioned advertising expense (2010 Annual Report, p.18). Given today’s recession, it may not have been wise to spend so much money on advertising, as no matter how glossy the adverts are, if the consumers have no money to spend in retail stores, there is no point to incessant nags on TV.

Products, though deeply discounted, are considered luxury, if not really essential to one’s living. The good news about increased operating expenses is that, it provides a tax shield as it is deductible from taxable income and this offset may just have caused Wal-Mart’s increase in net income from 2010.

Given the company’s growth rate, its lease commitments for 300+ future locations can be found questionable by its stockholders as such contracts is equivalent to 17 years’ worth of growth (My Hot Topics, 2010)

Conclusion
At the outset, numbers can be misleading. Despite Wal-Mart’s promising figures are numerous “issues” that can mar shareholders’ confidence on the stability of the company. Wal-Mart is almost a two hundred billion dollar corporation; hopefully they can fix the qualitative aspects of their financials and not just the quantitative part.

References:
Wal-Mart. 2010 Annual Report. Retrieved 2 August 2010 from
http://walmartstores.com/sites/annualreport/2010/financials.aspx
My Hot Topics. 2010. Revealing Numbers in Wal-Mart’s 2010 Annual Report. Retrieved 2
August 2010 from http://www.x10dur.net/wordpress/2010/05/04/revealing-numbers-in-wal-mart%E2%80%99s-annual-report/

Since inception, Wal-Mart has been strongly opposed to unionization of its workers in its operations internationally. This has been linked to the trials to cover vast malpractices that happen undercover and which can easily be exposed by unionization of the employees. The company views unionization of workers as a direct erasure for the current coterminous system and replacement with immediate plethora of demands and considerations ‘unnecessary’ for effective business operation.

Though majority of the employees consider it to be a minor misdemeanor, it is clear that human ethical considerations in human rights management must articulate the people’s demands for higher and sustained intrinsic and external returns. A brief history Wal-Mart was established in 1969 in Rogers, Arkansas where it operated steadily and rapidly grew to increase stores outlet to 24 through in different stated by 1968. During the same year, it had reached a total sale of $ 12. 6 million. In 1972, it was listed in the New York stock Exchange and spread to five more states by the following year.

With strong and constant growth, the company continued to grow attaining a total sale of $ 15. 9 billion and 200, 000 associates in the year 2001. By the years 2002 the company had established major stores in majority of the American States and outside making it to be ranked the largest public corporation in American and the world in the year 2005 with revenues totaling to $ 219. 8 billion and profit of $ 6. 7 billion in the same year. To add to that, it is the largest private employer and the third largest commercial employer after British Health Care Services and The Indian Railways (Richard, 2008).

Over the last decade, the corporation has been strongly criticized by the labor unions regarding its refusal to allow the employees to be unionized and low rates of health insurance enrollment in the country. Its business policies are oppressive to the employees and other workers both physically and psychologically. Wal-Mart Inc anti union policy Closing down stores and departments that unionize Employees form the most important part of a business entity essential for ensuring that the immediate policies are properly articulated in its establishment.

Their consideration therefore, anchors businesses and guarantees its sustainability. Wal-Mart Inc closed its store in Jonquierre, Quebec in April 2005 after its employees were issued with their union certificate for the region. Previously in the year 2000, it announced the phase out of its in-store meat cutting company after a small department in the section organized a union in Texas. Unionization of workers acts as a major guideline for addressing the workers rights effectively and collectively negotiating for the workers on the major problems facing their members (Food and commercial workers union, 2008).

Though mostly misunderstood, it acts as a major item that can be used as a direct indicators and a strong framework in the management of the business enterprises. In December 2005, the Quebec Labor Board ruled in favor of the employees and demanded their compensation as the store had closed in response to workers being unionized. Management demands for anti union activities The manager’s tool boxes issued to them by the organization leadership contained a list of warning signs that the managers should look for as direct indicators of workers planning to unionize.

These signs included frequent meetings at associate’s homes and other new informal meetings by the employees. The tool box has been indicated to have hot line numbers upon which specialists are reached to terminate the union initiatives. Besides, indications of strong anti-union policies are evident by the vast cases regarding the employees in different courts of law. In the last several years, over 100 cases relating to unfair labor practices of the employees in their work places have been filed with 43 cases being in the year 2002.

Since the year 1995, Wal-Mart Inc has received over 60 complains by the government against on the International Confederation of Free Trade Unions and the National Labor Unions Laws violation (Kimberly, 2003). Violations have been vast ranging from illegal firing of the employees from their work places at the slightest indication of involvement with unions to gender discrimination. To add to that, massive threats and strong intimidation of the employees has been a common practice meant to silence them and navigate their minds from immediate union demands through instilling fear in the name of loyalty for their work.

Verizon Communications Inc. and unions representing nearly 40,000 wireline workers have reached a tentative deal to end a strike that has stretched for more than month, U.S. Secretary of Labor Thomas Perez said on Friday.

Shares in Verizon jumped as much as 1.2 percent after the announcement and in afternoon trading were up almost 1 percent at $50.62.

“The parties are now working to reduce the agreement to writing, after which the proposal will be submitted to CWA and IBEW union members for ratification,” Perez said in a statement.

Workers will be back on their jobs next week, Perez added.

Network technicians and customer service representatives in the company’s Fios Internet, telephone and television services units walked off the job on April 13 after contract talks hit an impasse. The action was called by the Communications Workers of America and the International Brotherhood of Electrical Workers.

Sticking points in contract negotiations had included job relocations, offshoring call-center jobs, pensions and healthcare coverage.

Verizon Communications and representatives from the two striking unions had been in contract discussions with the help of the U.S. Department of Labor. In mid-May, Perez brought both parties back to the negotiating table.

The work stoppage at Verizon stretched across several U.S. East Coast states, including New York, Massachusetts and Virginia. 

Verizon said it had trained thousands of non-union employees over the past year to ensure no service disruption.

Verizon plans to report second-quarter results on July 26. Company executives have hinted in recent weeks that the strike could pressure the bottom line. 

(Reporting by Malathi Nayak; Editing by Diane Craft)