Has Wal-Mart (NYSE:WMT) Taken a fall?

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By Erik Waters on October 20, 2014 Consumer Staples

Wal-Mart (NYSE:WMT) is a big name in the global market. It’s a multinational retail firm that is made up of huge discount departmental stores as well as warehouse stores. It started back in the 1962, in Arkansas and then spread all over the world, with more than 11000 stores in over 27 countries. In different regions it operates under a different banner, and has a total of 55 working banners.

Wal-Mart (NYSE:WMT) de Mexico y Centroamerica, is a public corporation that started as Cifra in 1977. But in 1991, Cifra and Wal-Mart (NYSE:WMT) entered a joint venture. By 1997 Wal-Mart (NYSE:WMT) gained 51% of Cifra stock and acquired the firm. After the acquisition, it became known as Wal-Mart (NYSE:WMT) de Mexico y Centramerica. Now there are 2037 outlets in Mexico including supermarkets and restaurants. One fifth of Wal-Mart (NYSE:WMT) stores are located in Mexico with over 209,000 employees and is also labeled as the number one retail company throughout Latin America.

According to latest news, Wal-Mart (NYSE:WMT) de Mexico’s CEO will step down in the beginning of next year. At this stage, the reasons for his resignation and the name of the successor are both unknown. According to speculation, it’s concluded that it might be something to do with the September 2005 bribe case. According to investigations, Wal-Mart (NYSE:WMT) de Mexico paid bribes to attain permits for construction purposes. A lot of evidence came into light that indicated laws were broken; permits for quick constructions were handled out to the company, giving them a competitive edge over other businesses. And these bribed locations were considered prime locations to open stores. Even though Wal-Mart (NYSE:WMT) officials repeatedly denied any such allegations, internal reports suggest otherwise. The Forbes magazine emphasized that this case highlighted serious flaws in the Wal-Mart (NYSE:WMT) management as well as problems in their strategy. And with each scandal the problem appears to get bigger. Wal-Mart (NYSE:WMT) itself contributed $99 million in internal investigations, not only in Mexico but China Brazil as well as India.

Earlier this month, reports of an old Michigan based pension fund surfaced that sued Wal-Mart (NYSE:WMT) for defrauding its investors by hiding bribes not only in Mexico but also China, india and Brazil. The investigation will include both US and Mexico prosecutors, who will look into the matter and executives of the Mexican division, will be brought in for further questioning. At this stage, the future of the Mexican division is unknown, as its popularity was based on the speed with which it came and conquered, but now since that has cooled down and with the bribery charges surfacing, the company is in a lot of trouble and will need a quick recovery plan.

Wal-Mart (NYSE:WMT) international chief, David Cheesewright says the next plan of action for the company’s progress is to prove that we can survive just as well in lower growth market. Hence, the brand is looking into opening new stores in various locations around Mexico.