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Abolish the Walmart Annual Rave, These Financial Trends Are Brutal

Tickers in this article: AMZN TGT WFM WMT

NEW YORK ( TheStreet) -- The time is upon mighty Walmart  to abolish its annual shareholder and employee rave. Actually, the company should make June 2014 its last celebration of a business that resembles little of the retailing disciplines of founder Sam Walton other than low prices. No more trotting Queen Latifah onto the stage (like at the 2007 annual meeting). No more Hugh Jackman as emcee. No more very weird Tom Cruise cameos that light up Twitter  and the investor relations page of Walmart that has live streaming commentary on the event.

It's time for Walmart to start an open and honest discussion with shareholders, whether it's Granny Smith and Grandpa Joe who own the shares from 1980 or XYZ institution, on the true state of its business. I believe the savings from not having an annual party in Bentonville, Ark., should be reinvested in nationwide town hall meetings, where executives from the ivory tower and regional managers meet with employees and shareholders to learn what is occurring on a micro level. Those are valuable insights not readily detectable in the litany of real-time data received from Walmart stores.

What's that true state of Walmart you ask? Well, it's counter to all of the hype that will emanate from the annual rave, that much is for sure. Here are the financial facts on the world's largest retailer that nobody else is talking about; they collectively paint a picture of a company that could be headed for some trouble in the distant future if corrective action is not taken today.

8 Stories on Walmart this Twitter Friendly Diagram Shows

  1. Walmart is cannibalizing its supercenters by building more supercenters near older supercenters.
  2. Walmart is cannibalizing its supercenters by in-filling areas with its grocery store format.
  3. Investments in stores and online are not yielding the desired financial outcomes.
  4. Walmart's massive investments to lower prices has caused Target , Whole Foods , Amazon , etc. to follow suit, closing the competitive gap with the world's largest retailer.
  5. Walmart should dramatically slow its U.S. supercenter openings and close underperforming stores due to the long-term outlook for online consumption.
  6. Is Walmart properly grooming the talent responsible for planning, allocation, and store management?
  7. There needs to be a complete strategic rethink of international operations, ultimately leading to a quicker pace of closings (closings right now appear to be focused on China). Since the fiscal year-end in January 2010, Walmart has increased the number of international units by a staggering 63.33%, and returns have fallen for the company.
  8. The stock has basically been supported by a whopping 14.81% reduction in shares outstanding since the year ended January 2010.

The Friday Vine Show

Want some visuals behind the numbers and views I just laid out? Welcome to the state of Walmart, a company that has resorted to attacking customers with "impulse" inventory between aisles and checkout. Given the bulge in inventory shown above and poor ROA metric, a reasonable assumption is that the Walmart customer is not biting at the company's amped up retailing tactics. So, Walmart is investing in inventory that doesn't move and requires markdowns, pressuring margins and returns.