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Sears, Roebuck and Co. Vs. Wal-Mart Stores, Inc

Problem:

Don Edwards, a recent MBA graduate has been asked to analyze the financial performance of Sears and Wal-Mart. Although Wal-Mart is the industry powerhouse, its 20% return on equity (ROE) lags behind that of Sears’ 22%.

Analysis:

Wal-Mart operates fewer stores than Sears but is ahead in terms of total selling area by a ratio of 3.4:1. Between 1995 and 1997, Sears’ retail store revenue per selling square foot was not only lower than that of Wal-Mart but in decline.

Sears allows customers to pay for merchandise over time if they use the company’s proprietary credit card. Sears opened 24 million new credit card accounts over a 3 year period and had 27 million active customer credit accounts with an average balance of $1058 in 1997. The balance on credit cards accounted for 90% of the total receivables. In contrast, Wal-Mart does not have their own proprietary credit cards and its customers may use a......

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Approximate Word Count: 594
Approximate Pages: 3 (250 words per double-spaced page)

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