Sears vs. Walmart

Sears, Roebuck and Co. vs Wal-Mart Stores, inc.

Advanced Financial Management

GBA 645

Introduction

The financial performance of Wal-Mart and Sears’ Stores can be analyzed using their financial statements. Both companies are equipped with the potential for individualized problems in a common market. Identifying the possibility of these problems before they happen can be the difference between a profitable investment and a non-profitable investment. The analysis of the financial ratios can help customers make a sound, informed investment decision.

Sears

Sears, Roebuck and Co. began as a catalogue company and has now become one of the largest retailers worldwide. Located primarily in shopping malls Sears’ stores opened in 1924 and carried a variety of products from jewelry to electronics. In the 1980’s the company was faced with increased competition which resulted in a decreasing market share. Sears found themselves in the middle of a financial hardship. In response they made attempts to create revenue through other projects such as financial services and real estate.

In 1995, Arthur Martinez was named CEO and made it his initiative to cut cost in order to improve profitability. A major contribution made by Mr. Martinez was the Sears’ credit card. This card was issued by Sears and gave the customer flexibility on payment options. Between 1993 and 1996 the company opened up 24 million new credit card accounts issued by Sears’ Credit. Credit sales accounted for over 55% of total sales.

Wal-Mart Stores, Inc

Started by a young man by the name of, Sam Walton, Wal- Mart Stores hold the title of the World’s Largest Retailer. Wal-Mart posted sales of over $43 billion and in just 5 years they reached sales in over $100 billion. Wal-Mart products range from tools to clothing and toiletries. To offer their customer’s payment flexibility Wal-Mart also offers a credit card however, it is issued by Chase Manhattan Bank. This agreement with Chase...