Wal-Mart Stores operates retail stores in various formats around the world. In the United States, Wal-Mart’s operation includes discount stores, supercenters, neighborhood markets, market-side, and Sam's Clubs. Its international division consists of operations in Argentina, Brazil, Canada, Chile, China, Costa Rica, El Salvador, Guatemala, Honduras, India, Japan, Mexico, Nicaragua, Puerto Rico and the United Kingdom. The company is headquartered in Bentonville, Arkansas and employs 2.1 million people to include full-time, part-time and seasonal employees (Walmart.com, 2010). The business operation of Wal-Mart is increasing continuously, which is causing an increase in the financial performance of the business. For the year ended January 31, 2000, Wal-Mart income increased by 8.5% to 14.93 billion from 13.75 billion a year ago. The company net income increased by 6.8% to 14.85 billion $13.90 billion in the year prior. Revenues were US$408.21 billion, up 0.9% from US$404.37 billion the year before. Operating income was US$23.95 billion versus $22.80 billion in the prior year, an increase of 5.1%. Direct operating expenses rose 0.2% to $304.66 billion from $304.06 billion in the comparable period the year before. Indirect operating expenses increased 2.7% to $79.61 billion from $77.52 billion in the equivalent prior-year period (www.mergent.com).
Target Business Summary & Financial Health
Target Corporation is a retailer which operates large format general merchandise and food discount stores in the United States, which include Target and Super-Target stores. The company is headquartered in Minneapolis, Minnesota and employs 351,000 people to include full-time, part-time and seasonal employees (Target.com, 2010). For the year ended Jan 30 2010, net income increased 12.4% to $2.49 billion from $2.21 billion in the prior year. Revenues were $65.36 billion, up 0.6% from $64.95 billion the year before. Operating income was $4.67 billion versus $4.40 billion in the prior year, an increase of 6.2%. Direct operating expenses declined 0.4% to $45.58 billion from $45.77 billion in the comparable period the year before. Indirect operating expenses increased 2.2% to $15.10 billion from $14.78 billion in the equivalent prior-year period (www.mergent.com).
Profitability Ratio Net Profit Margin is a profitability ratio that indicates how much profit a company makes for every dollars it generates in revenue or sales (Investopedia, 2010). Target net profit margin has slightly fluctuated while Wal-Mart’s has been consistent. Over the past three years, Target has had a great profit margin than that of Wal-Mart.
|NET PROFIT MARGIN |
| |2010 |2009 |2008 |
|Target (TGT) |3.81 |3.4 |4.5 |
|Wal-Mart (WMT) |3.51 |3.31 |3.4 |
Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested (Investopedia, 2010). Wal-Mart’s return on equity has been very consistent over the past three year and has grown slightly. On the other hand, Target’s return on equity has decreased by 1 point each year.
|RETURN ON EQUITY |
| |2010 |2009 |2008 |