Wal-Mart Providing Blueprint For Future Store Growth

Goldman Sachs has published a research report on Wal-Mart Stores, Inc. WMT as the smaller store format elicits a blueprint for future store growth. In the report, Goldman writes "WMT hosted a store tour at its newest supercenter in the New York area. The Garfield, NJ store opened on August 18. At 142k square feet, it represents a smaller prototype for supercenters. We highlight the following: 1) Expanded SKUs and smaller pack sizes hitting the floor. Greater breadth of assortment, categories and smaller pack sizes provide evidence of WMT's recent proclamation to vendors that it is 'open for business'. 2) Local market tailoring key to smaller format. To provide a full food offering within a 142k sq ft footprint, the company has eliminated some departments (fabric, in this case) and shrunk others (e.g. sporting goods). These decisions are market specific, based on local demographics. 3) Smaller store formats key for future growth… As WMT enters more densely populated areas (e.g. Chicago and DC), smaller store formats will be an increasingly important component of the company's growth. 4)…also ROI-enhancing. The Garfield store is a top-30 sales store in WMT's fleet, despite its smaller size, suggesting favorable ROI dynamics. 5) Focus attention on EDLP, away from rollbacks. We see an ongoing shift of in-store signage away from rollbacks and toward EDLP messaging." Goldman maintains its Buy rating and $58 price target on Wal-Mart Stores, which closed yesterday at $54.49.