Can Wal-Mart Stores, Inc. (WMT) Stay Competitive?

March 1, 2016

Peter Siphron, Senior Vice President at Siphron Capital Mangement, looks at Wal-Mart Stores, Inc. (WMT) as a mirror image, from a brick-and-mortar aspect, of Amazon.com.

Starting with the brand-name recognition, you have an established business that is known very well to its customer base. And those loyal customers have been very comfortable going into the Wal-Mart stores. They know the layout, they know the name, they know what they should expect, and they know they are getting a good deal.

They’ve not only survived the Internet boom/bust, but the financial recession we had recently. And that is because they are the go-to retailer that people do trust.

Peter Siphron

Siphron says there are also contrasts between the two companies.

[Wal-mart has] built out over 1 billion square feet of retail space, largely company-owned, but they have managed that sales growth in a very consistent and profitable fashion. You can just look at the last completed fiscal year for Wal-Mart versus Amazon over the last decade, and in the last year, Wal-Mart earned more in profit, almost 3.5 times more than Amazon’s total profit over the past decade.