Today WalMart announced that for the first time in a decade it’s quarterly earnings actually declined.  The stock is down again, remaining a very poorly performing equity investment since the company peaked back around 2000.  Since then, investors have not been rewarded for staying with the Locked-In strategy of the world’s largest retailer.

Did you see it coming?  You should have.  For over a year this blog has been pointing out that Wal-Mart is horribly Locked-in to its old ways, and unwilling to use White Space to create a new Success Formula.  Although it’s impossible to predict the day when things will demonstrably go south, it isn’t hard to predict the trend if you pay attention to White Space – or lack thereof.

When announcing these poor results, Wal-Mart blamed high gasoline prices.  Let’s see, for 3 years now we’ve had high gas prices, and Wal-Mart has blamed petroleum costs for its problems.  You’d think by now, if management was as good as it claims, the company would have adjusted to the reality that gasoline is most likely to remain expensive.  At the very least, they should have executed contingency plans to react to such a market Challenge.  Instead, they plod forward with the same Success Formula, fail to meet expectations, then blame circumstances that they long ago should have planned for and dealt with.

Worse, Wal-Mart leadership blamed this specific quarterly failure on selling off WHITE SPACE projects in Germany and Korea.  Wal-Mart is a company that desperately needs to find a new future.  To overcome its Lock-in.  Yet, once again, we see they have decided to exit markets where they should be learning and growing.  If they can’t succeed the Wal-Mart way, then they leave.  If there was ever a big, bright red flag that says this company is in trouble, missing earnings forecast while exiting White Space and blaming the cost of White Space for their earnings problems – while ignoring market challenges like high oil prices – has got to be it. 

This should be a clarion call to avoid this company as an investment, as an employer, and as your primary customer – unless you want to suffer prolonged poor performance.  If they miss forecasts again next quarter they will officially enter a growth stall, and that will put them in the category of having less than a 10% chance of ever maintaining growth of a meager 2%.  The chances of a turnaround are nil, simply due to demonstrated Lock-in, and the odds of a growth stall just jumped dramatically.