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By Erik Kobayashi-Solomon | 12-17-2009 11:50 AM

What's in Store for Wal-Mart?

Morningstar analyst Joel Bloomer on the company's bumpy overseas expansion and the firm's transition to reduce its capital expenditure budget and boost its free-cash-flow margin.

Securities mentioned in this video
WMT Wal-Mart Stores Inc

Erik Kobayashi-Solomon: Hi, I'm Erik Kobayashi-Solomon, co-editor of Morningstar's OptionInvestor newsletter. A few weeks ago, I wrote an article about Wal-Mart, the giant retailer, where we stand to gain about 50% profit over about a year's time.

To find more about Wal-Mart, I've invited associate director of the retail team and the coverage analyst for Wal-Mart, Joel Bloomer, to come and talk to us today. Thanks for coming.

Joel Bloomer: Sure.

Kobayashi-Solomon: One of the things that I worry a little bit about Wal-Mart is, a few years ago when they started expanding overseas, I think they kind of flubbed things a little bit. I know their expansion in Germany didn't work out very well. What do you think the risk is that the same kind of thing will happen again?

Bloomer: You're right. They have had some stumbles in the past, and I think Germany is a good example of that. It was about a billion-dollar investment. They were in the market for about eight years and, basically, lost money over that entire period, sold the business in '06 for about a billion-dollar loss, which equates to shareholder value destruction.

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