WAL-MART'S Share Price Is The Biggest Drop, But Not Enough?

Although WAL-MART experienced deep structural adjustment, strategic upgrading and low profit shop optimization and upgrading from 2013 to 2015, it still can not get out of the development dilemma in the past two years in the context of the deep adjustment period of retail industry.

In October 14th, WAL-MART's share price plunged nearly 10% to 3 years low, or hit the biggest decline in a single day in 15 years, and the market value dropped 22 billion dollars.

The main reason is that WAL-MART announced earlier that day that the company expects its profit in the 2017 fiscal year to decline by 6% to 12%.

What is the development dilemma of the retail giant?

China is becoming a microcosm of WAL-MART's global market, and the retail giant is undergoing a period of adjustment in China.

Liu Hui, a veteran retailer, told reporters that although WAL-MART's action has been constant in recent two years, WAL-MART's standardization mode is very difficult to adapt to the diversified development of China. Even though the company has made many reforms, it still can not solve the practical problems fundamentally.

"WAL-MART has been implementing the standard mode of Shang Chao, after the company's unified reform of procurement and the strengthening of" centralization "of the company, its purpose is to standardize products and operate super operation standardization, which can be implemented in the US market, but it is hard to copy in a diversified and multi-level market in China.

Liu Hui spoke frankly to reporters.

Liu Hui further told reporters that the Chinese market is a diversified market, and there are more consumers and diverse needs, so that the standardized WAL-MART has not been particularly favored by consumers.

Liu Hui told reporters for example, for example, the consumption characteristics of consumers in Beijing are different from those of consumers in various districts and counties around Beijing, and the consumers in different districts and counties around Beijing are different from those in Hebei. If WAL-MART unified standardized features, it is difficult to adapt to the diversified market.

"If WAL-MART wants to adapt to the needs of the Chinese market, we must break the standardized development mode and truly realize localization and specialization, which is in conflict with the development keynote of WAL-MART. Therefore, WAL-MART has been carrying out reforms in recent two years, but the reason why its performance growth is not obvious is obvious."

Liu Hui told reporters analysis.

However, some people told reporters that although WAL-MART has made many adjustments in China, each adjustment is not complete.

Statistics show that in October 2013, WAL-MART announced a series of plans for its development in China, while strengthening the "centralized system" and planning 110 new sites in the next 3 years in Hua Xinzeng, including shopping malls and distribution centers.

It also said that it had pformed 45 existing stores in 2013.

"But today, this kind of reform is still ongoing, and it has not ceased. With the impact of e-commerce and overseas purchasing, WAL-MART has vigorously developed the electricity supplier, so that the old wounds are not healed, and new injuries are added."

Another industry insider told reporters.

In the United States, local stock market in October 14th, the US stock market went down, and the world's largest retailer, WAL-MART's share price crash, aggravated the decline of the Dow Jones index.

At the close, WAL-MART's shares fell 10.04% to $60.03 a share, and the market value evaporated about $22 billion a day.

According to reporters, this is the largest single day decline since 1988 in WAL-MART.

The reason for the sudden fall of WAL-MART's stock price is related to its poor forecast for future revenue at the investor conference held on that day.

WAL-MART expects profits in fiscal year 2017 to decline by 6% to 12% over the previous fiscal year, much less than analysts had expected 4% growth.

And will continue to shrink in the 2019 fiscal year.

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In this regard, WAL-MART's explanation is that on the one hand, WAL-MART is spending more on employees' salaries and training. In addition, it is committed to improving the user experience and continuing to invest in electricity providers. On the other hand, the continued strength of the US dollar may lead to an increase in the number of employees.

Annual revenue decreased by US $15 billion.

This explanation is different from what WAL-MART's responsible person said in an interview with reporters in October 15th.

According to a reply sent to reporters by WAL-MART, the reason for the announcement is lower than expected.

The rate of expansion slowed down.

It is reported that WAL-MART also launched a buy back plan.

According to relevant materials sent to reporters by WAL-MART, Wal-Mart Store Inc also announced that its board of directors has approved a new $20 billion share repurchase project and withdrew the remaining $8 billion 600 million of the share repurchase project approved by the company in 2013.

In October 14th, WAL-MART China stakeholders said in an interview with the China times that the company has launched a 3 year strategic development framework to strengthen its US business and the development of its e-commerce business.

The net growth rate of annual sales in the next 3 years is expected to be between 3% and 4%, equivalent to the total growth of 45 billion to 60 billion dollars.

The person also said that the stock price of WAL-MART suddenly fell, and has no direct impact on the Chinese market.