My thesis for buying Wal-Mart (WMT) was very simple: once it improves its store appearance and merchandise, existing customers will spend more money and new customers will start spending new money on higher margin merchandise. Same store sales will go up and everybody will be happy (except competitors like Bed Bath and Beyond (BBY), Linens and Things (LIN), etc.). Then, international growth will keep the giant growing for years to come.
So far so wrong. Same store sales dipped into negative territory – not so good. International growth? Well, exiting Germany and South Korea was not part of my plan but it actually made sense, Wal-Mart could focus on the countries where it has a competitive advantage and labor laws are less… well, socialistic.