Wal-Mart Economic Indicators

I. Introduction

Unit 5 assignment paper will focus on Wal-Mart domestic operations and how the firm should respond to the economic indicators with the goal of maximizing revenues.

The indicators and ratios selected were: Retail industry sales, Gross Domestic Product (GDP), Inflation rate (CPI), Unemployment rate, Consumer Confidence Index, US Household Debt.

Wal-Mart operations consist of three business segments: Wal-Mart U.S., international and Sam’s club. Wal-Mart domestic operations have more than 4,300 facilities and represent 63.8% of the total sales that is a marginal increase from last year (63.7%).

Based on the Wal-Mart 2010 annual report, US net sales increased 1.1% to $258 billion. The segment net sales growth in fiscal 2010 resulted from an increase in customer traffic and strength in Wal-Mart grocery and health and wellness categories, as well as expansion activities. In 2009 the net sales increased 6.9% to $255 billion.

II. Economic Indicators

Consumer Price Index (CPI): The main measure of inflation in the United States is the CPI, compiled by the Bureau of Labor Statistics (McConnell, Brue and Flynn, 2009). CPI will be used to analyze the effects of inflation in the overall purchasing power that in fact can affect the total sales.

“The annual US Inflation Rate for the 12 months ended in November, 2010 was 1.14%. That's 0.03% percent lower than the 12 months ended in October, 2010 which inflated at a rate of 1.17%. It is 0.70% percent lower than the 12 months ended in November, 2009 which inflated at a rate of 1.84%. The fall in inflation rates from October to November indicates that the short term inflation trend has been down. If that trend continues, we should see an inflation rate for the 12 months ended in December, 2010 that is close to 1.11%.”(Source: Forcastchart.com).

Inflation Rates by Month and Year

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual

2009 0 0.2 -0.4 -1 -1.3 -1 -2 -1.5 -1 -0...