Analyst: Wal-Mart facing growing list of issues
NEW YORK (AP) — The growing list of issues facing Wal-Mart is becoming more of a concern for a Stifel Nicolaus analyst, who downgraded the world's biggest retailer on Friday.
On Thursday Wal-Mart reported a 21 percent decline in its fourth-quarter profit. The company said that the Nov. 1 expiration of a temporary boost in food stamps is hurting its shoppers' ability to spend. It's also caught up in the debate about minimum wages and dealing with increasing competition from dollar stores and grocers. That's in addition to increased taxes, tighter credit and bad winter weather keeping some shoppers away from stores.
David Schick of Stifel Nicolaus said in a client note that the growing pressures comes at a time when Wal-Mart is in a transitional period as some executives settle into their new roles. Among them is Doug McMillon, who took over as CEO on Feb. 1.
The analyst said that while he thinks Wal-Mart has become more realistic about its opportunities, strengths and weaknesses, its list of positives is offset by a much longer list of concerns.
Schick lowered his rating for Wal-Mart Stores Inc. to "Hold" from "Buy."
But Jefferies' Daniel Binder recommends investors stay with Wal-Mart a little longer to see what McMillon can do now that he's at the helm.
"McMillon appears ready to get this business moving in the right direction," he wrote.
Binder maintained a "Buy" rating and price target of $87.
Wal-Mart does not comment on analyst reports.
The Bentonville, Ark. company's stock fell 32 cents to $73.20 in afternoon trading.