The Dow Jones Industrial Average (DJINDICES:^DJI) is up 106 points in late afternoon, and other indices are trading higher as well, after positive economic data was released this morning. The Conference Board's Leading Economic Index rose 0.3% in January despite bad weather across the country. A survey of manufacturing by Markit also rose to 56.7 this month from 53.7 in January; any reading above 50 indicates manufacturing expansion.
As I'm writing, 25 of 30 Dow Jones Industrial Average components are moving higher and the only one significantly lower is Wal-Mart (NYSE:WMT), which has fallen 1.9%. The company reported earnings last night and can't seem to gain traction versus rivals such as Amazon.com (NASDAQ:AMZN), which are taking a larger share of retail right now.
Wal-Mart's problems continue
After being a market beater since going public, Wal-Mart has become a laggard over the last decade.
Yesterday's disappointing fiscal fourth quarter and full fiscal 2014 earnings report indicates the company and its stock are not reversing course into a better direction. Wal-Mart's quarterly global revenue was up just 1.5% year over year, while income from continuing operations dropped 22.2% to $4.4 billion as higher operating costs ate into margins.
The bigger concern is that Wal-Mart U.S. same-store sales have now fallen in four consecutive quarters after losing 0.4% in the fourth quarter. This is the same period in which Amazon's sales were up 20% and consumers decidedly shifted to purchasing goods online.
The long-term trends are concerning for Wal-Mart as online retailers continue to take market share from brick-and-mortar stores. These retailers are more worrisome competitors now because they have scale that once only belonged to Wal-Mart. Every percentage point Amazon grows has to come from somewhere, and Wal-Mart is one of the main losers because it has always competed on cost.
I think this is just the latest sign that Wal-Mart will be a big Dow laggard in 2014 and will have trouble making gains over the next decade. The face of retail is changing and it no longer belongs to Wal-Mart.