Oct 4 2012
All these days Amazon.com enjoyed tax exemption on its online sales. From September 15th onwards state of California joined Texas, New York and other five states in imposing sales taxes on Amazon online sales. The combined population from all these eight states is more than third of the national population. Next year New Jersey and few other states start collect taxes from online sales. The well anticipated tax change keep companies like Wal-Mart on competitive edge with online retailers like Amazon, and may give second life to lone brick and mortar book companies like Barnes and Nobles and electronics retailers like Best Buy. But it certainly helps many big retailers like Wal-Mart. If the unfair tax advantage is eliminated people tend to buy at brick and mortar retailers like Wal-Mart due to free shipping to nearest retail location for pickup and for convenience of sales returns.
Last month Indian government eased restrictions on foreign retailers; Wal-Mart is now spreading its wings into Indian market through joint ventures. Twenty nine percent of Wal-Mart’s revenue comes from international sales and revenues at international segment are growing at 15% rate. Wal-Mart has 5600 international retail stores; out of that Wal-Mart has only fifteen stores in India. The potential to serve more than billion customers in Indian market is tremendous. Wal-Mart financials look impressive and can weather both tough and good times. Recently I included Wal-Mart into my portfolios including Covestor.
Disclaimer: These are my opinions, not a recommendation to buy or sell equities or derivatives. As always do your due diligence .