Wal-Mart Stores, Inc. (WMT), Costco Wholesale Corporation (COST): Is This Retail Giant Increasing Its Sales?

The table above shows the company’s growth in sales was partly due to an increase in the number of stores (4.2% growth) and partly due to a rise in sales per store (3.6%). So not only has the company expanded its reach with new stores, its average store also sold more than it had in the past.

Moreover, Costco Wholesale Corporation (NASDAQ:COST)’s operating profit increased by a sharp 15.9% in total, and by 11.3% per store. Despite the sharp rise in operating profit, the company’s profitability is still well below Wal-Mart’s: Costco Wholesale Corporation (NASDAQ:COST)’s profitability reached 3% in the second quarter; Wal-Mart’s profitability, 6%.

But this isn’t the case for Target Corporation (NYSE:TGT). As seen in the table below, the company’s sales per store slipped by 0.7% during the recent quarter. Furthermore, the operating earnings per store tumbled by 13.9%. In other words, the average store is not only selling less but also earns less. Based on the performance of these two companies, this puts Wal-Mart in the middle of the pack in terms of growth in sales and operating profit per store.

Source: Target’s quarterly earnings report.

Takeaway
The above comparison should give you a clearer picture of Wal-Mart’s performance in the past quarter, and a comparison with other leading retailers. This analysis also puts Wal-Mart Stores, Inc. (NYSE:WMT)’s growth into perspective. It shows that the retail giant didn’t perform well in the past quarter and its average store has been making less money than in the past.

Finally, Wal-Mart’s decision to expand outside of the U.S. might eventually lower its profit margin and reduce its revenue per store, which would lower the company’s attractiveness as an investment.

The article Is This Retail Giant Increasing Its Sales? originally appeared on Fool.com and is written by Lior Cohen.

Fool contributor Lior Cohen has no position in any stocks mentioned. The Motley Fool recommends Costco Wholesale. The Motley Fool owns shares of Costco Wholesale.

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