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    Goldman Sachs Analyst Slaps Wal-Mart for Strategy 'in Flux'

    BENTONVILLE, Ark. - Wal-Mart's challenges on Wall Street continued yesterday, as a Goldman Sachs analyst said the chain's latest moves signal indecisiveness, and called for senior management changes. The chain's stock price dropped 39 cents by the end of trading.

    BENTONVILLE, Ark. - Wal-Mart's challenges on Wall Street continued yesterday, as a Goldman Sachs analyst said the chain's latest moves signal indecisiveness, and called for senior management changes. The chain's stock price dropped 39 cents by the end of trading.

    "Wal-Mart's strategy seems to be in flux," The Goldman Sachs analyst, Adrianne Shapira, said in a research note, in which she also yanked back her rating on the retailer's shares to neutral from buy.

    Shapira said returns on changes to Wal-Mart's existing store base aren't emerging as quickly as she had hoped, and she predicted that fiscal year 2007 will be a period of transition, at best.

    "Despite over 1,300 remodels, merchandise overhauls, and aggressive promotions, sales have become increasingly pressured," Shapira said. "We had hoped that after a year of planning and new management in place, holiday 2006 would provide some glimmer of hope.

    "We believe margins will face headwinds in 2007 as the current inventory of slow-moving home and apparel merchandise dissolves," Shapira said.

    Noting that the retailer appears to be "straddling the fence," Shapira posed the following questions: "Will Wal-Mart continue to target incremental sales from higher-end consumers? Or will the company go back to its roots to reinforce its pricing message?"

    After, the Goldman Sachs downgrade, Wal-Mart's stock price dropped 0.8 percent in trading, closing 39 cents off yesterday.

    Shapira noted that there are several positive factors that may lift the stock, including lower investor expectations, and Wal-Mart's $4 generic prescription program which should increase customer traffic down the road

    Last week, Wal-Mart said sales at stores open longer than a year rose 1.6 percent in December. That was a significant month-over-month i0mprovement from November's minus -- 0.1 percent.

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