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Wednesday, August 16, 2006

Wal-Mart and Home Depot Showing Weakness

Problematic economic symptoms combined with potential bad timing are showing up at Wal-Mart and Home Depot. Wal-Mart is taking a one time charge of $863 million related to the pull out and sales of stores in Germany. Wal-Mart is also retreating out of South Korea. To compound problems, Wal-Mart is undergoing store resets that can take up to 13 weeks before the remodelling is completed and the old products are replaced with new. These resets disrupt the flow in stores and distract employees and are occurring as energy prices are spiking around the world. Home Depot is facing stiff competition from Lowe's on one hand and a visibly slowing housing market on the other. Yet, CEO Nardelli is not cowering from the storm, he's running head long into fight off the elements with what he hopes is a good offense. Home Depot has experience some distractions of its own as many companies have been bought by Home Depot to add to the Home Depot Supply group. Now Home Depot is working to reset its own stores, and instead of decreasing the number of associates on the floor for the fall Home Depot is going to maintain the same levels going into the Christmas season.