Sear vs Walmart

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9-101-011 REV: JANUARY 19, 2006 GREGORY S. MILLER CHRISTOPHER NOE Sears, Roebuck and Co. vs. Wal-Mart Stores, Inc. Don Edwards, having just earned an MBA, decided to take a job as an analyst with a prestigious investment bank. He was assigned to a team that followed retail companies. His first task was to prepare a report that contrasted the financial performance of Sears and Wal-Mart. Although WalMart was the acknowledged powerhouse of the U.S. retailing industry, Sears had made some great strides in the 1990s to revive the fortunes of its ailing stores. In fact, Edwards noted that Sears ' ROE of 22% exceeded Wal-Mart 's ROE of 20%, leading him to wonder which firm was the true powerhouse. Edwards knew that there was a good…show more content…
Exhibit 6 provides some information on the breakdown of the company’s operations by business segment. Sears was split into retailing, service, and credit businesses. The retailing segment consisted of the company’s namesake stores in addition to four different specialty chains that featured home furnishings, hardware, tires and batteries, and auto parts. The service segment was primarily composed of a business that performed home remodeling and appliance repair. The credit segment represented all activities related to Sears’ credit card. Exhibit 7 supplies further detail on various aspects of operations for the credit segment. Wal-Mart Stores, Inc. In 1962, Sam Walton opened the first Wal-Mart in Bentonville, Arkansas. What began as a single store in a small rural community grew over the next three decades into a retailing powerhouse. Posting net sales of $43.9 billion in 1991, Wal-Mart claimed the title of world’s largest retailer. Continuing on a track of tremendous growth, the company was able to break $100 billion in annual net sales just five years later. Besides Wal-Mart’s namesake discount stores, the company also operated Sam’s Club membership warehouses and Wal-Mart Supercenters. Wal-Mart’s pledge to provide a competitive price on anything that it sold was reflected in the slogan, “Always low prices.” Beginning in 1996, a Wal-Mart customer could obtain a MasterCard
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