It was business as usual for Wal-Mart last Tuesday for a superstore opening in Peru, Ill., which is to say the mood was of righteous self-assuredness. A marching band played "The Star-Spangled Banner," store manager Mitch Lippert whipped up his troops ("Who's fired up!"), and Rev. Oscar Shepherd of Christ Family Foursquare Church sought the Almighty's blessing "as we interact with each other in the marketplace."

You'd never know Wal-Mart Stores Inc. was in a heap of trouble.

The company's growth rate has slowed to a crawl, overtaken by rivals once thought to be no match for the "beast of Bentonville." Average annual profit growth lags that of Target Corp., Costco Wholesale Corp. and other competitors. Wal-Mart's repeated efforts to push upscale merchandise have ended in tears. Expansion at home is still thwarted by hundreds of U.S. communities; and several forays abroad are struggling or have been scrapped. The stock price is down 32 per cent since the turn of the century, when CEO Lee Scott took the reins, while the Morgan Stanley retail index has soared 180 per cent.

If Wal-Mart wasn't 40-per-cent controlled by the heirs of founder Sam Walton, an "activist investor" like Carl Icahn or Kirk Kerkorian would be calling for Scott's head and the spin-off of Sam's Club, an also-ran to Costco.

As it is, many on Wall Street are convinced Scott will be out of a job come next year if he can't show some progress over the next six months in breathing new life into the world's largest retailer. He isn't given much hope of doing so. "[This] is the end of the age of Wal-Mart," Richard Hastings of U.S. retail ratings agency Bernard Sands told Business Week in April. "The glory days are over."

At 45, Wal-Mart is showing its age. With sales of $345 billion (all figures U.S.) last year at 6,779 stores in 13 countries employing a total of 1.9 million people, Wal-Mart still has the clout to dictate pricing and package design to giant suppliers like Procter & Gamble, Campbell Soup Co. and Dell Inc., which rely on Wal-Mart's 3,443 U.S. stores and thousands more abroad as one of their biggest, if not their largest, distribution channels.

But last year, Wal-Mart eked out same-store sales growth, at outlets open at least a year, of just 1.9 per cent, a mighty comedown from the routine double-digit increases of the 1990s. Scott has responded with top-level management shuffles, an overdue store-remodeling campaign, and a renewed determination to crack foreign markets. Yet Scott has not been able to budge the needle.

Full Story: http://www.thestar.com/Business/article/245470

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