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Strategies & Market Trends : John Pitera's Market Laboratory
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To: estatemakr who wrote (8469)11/27/2007 11:49:29 PM
From: John Pitera  Read Replies (1) of 33421
 
Intermountain west.....where be that?

The key bottom line profitability issue I have with WMT is that they went to lengths to get rid of people with more then 2 years of experience this past year to get newer less experienced associates that do not make the higher wages and get the company benefits, anywhere to the same proportion as to the employees that were eliminated.

That tells me that the WMT model had wrung all of the excess costs out of their model the point of hurting their customer servicing capability and more significantly the employee moral of the entire company. When a company goes to this length, management has gone into hyper overdrive to try to manufacture synthetic EPS and margin numbers and the business is in for a 5 to 7 year period of quality and margin deterioration. I believe if you examine the revenue and earnings metrics of this company over the next 3 to 5 years you will see a very significant drag due to this debasement of employee compensation and valuation of employee contribution per share.

Oh yes and watch what happens to WMT and the places they source their products when you see a 17.5% to 20% increase in cost of product from China. WMT will be more adversely impacted than any other retail firm in the US.]]

and the upward move in the RMB will have to occur.

John
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