News

Big-box retailers shifting focus to smaller stores

April 12, 2012

Big-box retail came alive in 1962, when Walmart, K-Mart, and Target opened their first stores, but after nearly 50 years of kicking mom-and-pop shops to the curb, big-box retailers' era of dominance may finally be coming to an end, according to Five Star Equities. The firm examines the outlook for companies in the services sector and provides equity research on Walmart Stores, Inc. and Target Corporation.

While big-box retailers continue to open larger stores, they are collectively shifting their focus to "small-box" stores. Best Buy Mobile stores are projected to double by 2016. Walmart looks to build up to 100 "small-box" stores this year, while Target looks to open five CityTarget locations, according to a release from Five Star.

"The biggest challenge for big boxes is increasing consumer confidence in making online purchases," Matt Arnold, an analyst at Edward Jones & Co. in Des Peres, Mo., said in the release. "Best Buy is arguably more exposed than the Walmarts of the world that are heavy in the food, apparel and consumables category. In the case of consumer electronics, it comes down to price. While big-box retailers are struggling, they aren't going away. They are shifting to smaller formats and investing in online retailing."

The Board of Directors of Walmart Stores, Inc. has approved an annual dividend of $1.59 per share, approximately a 9-percent increase from the $1.46 per share paid during fiscal year 2012. For the current fiscal year ending Jan. 31, 2013, the annual dividend of $1.59 per share will be paid in four quarterly installments of $0.3975 per share, according to Five Star.

Target Corporation reported that its net retail sales for the five weeks ended March 31, 2012 were $6,427 million, an increase of 7.9 percent from $5,955 million for the five weeks ended April 2, 2011. On this same basis, March comparable-store sales increased 7.3 percent.

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