Wal-Mart (WMT) Investors to Focus on Domestic Results

Wal-Mart Stores (NYSE:WMT) has been making great strides in its global strategy, but domestically it continues to struggle, as economic conditions continue to favor competitors serving lower and higher income consumers.

During the deepest part of the recession Wal-Mart was the domestic leader, with high-income consumers gravitating toward the discount retailer as they struggled with everyone else.

The problem for Wal-Mart is dollar stores were eating into their lower-income demographic at the same time, which hasn't come back as they had hoped. Higher income individuals have also went back to their usual retail stores now that they're on surer footing, putting pressure on them from that quarter.

That's the challenge Wal-Mart faces domestically, and so far it appears they don't have any short-term answers.

With that as a background, shareholders and investors are going to zero in on the domestic performance of the company for the Christmas season to give hints as to the company's fortunes over the next several quarters.

Wal-Mart's domestic sales still make up about 75 percent of its overall revenue of $405 billion annually. The bad news is same-store sales have dropped for six quarters in a row in America.

The ongoing recession continues to take a bite out of Wal-Mart's historic demographic, and as mentioned, they continue to spread their money around at dollar stores around the country.

Much of this is the fault of Wal-Mart, as they became schizophrenic concerning who its core customer was, and moves like attempting to bring in higher-end clothing and removing the big stacks of discounted goods to make the store look roomier to appeal to a higher-income clientele hasn't worked for them.

The long-term approach domestically for Wal-Mart is to return to its discount roots and style, move into more urban areas, and to create a plethora of smaller stores to compete with rivals who have been chiseling away at sales in targeted product groups.

It's not as if Wal-Mart is in trouble in the long term, but they've created a problem that could weigh on the share price of the stock for some time as they make the necessary transitions to spark domestic growth again.

International growth could help ease the pain during that time.