Senior Vice President George Smith of Davenport & Company LLC says his firm recently sold Wal-Mart Stores, Inc. (WMT) because the company is facing too many headwinds.
We liked the dividend record; we liked the quality of the balance sheet and the long-term history of the company. However, a combination of reasons caused us to sell it.
One, the earnings and sales flattened out despite numerous efforts and strategy changes to try to stimulate those sales, and we felt that, over time, they were just market-share losers that various other retail franchises were picking away at and even increasing costs for Wal-Mart on the labor side. All these added up to a period of growth not being there for another couple of years.
And while the stock had come down, it was still not really cheap. We felt like we could find better opportunities elsewhere. That was a hard one to sell because it’s a company we had for a while and was certainly the company that met many of our other criteria, but we felt like it was facing too many headwinds and was too big a ship to turn around in the kind of a horizon we were looking for.
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