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MISSION:INTANGIBLE, the blog of the Intangible Asset Finance Society, offers critical comments on intangible asset, corporate reputation, and finance; supplemented by quantitative reputation metrics. Intangible assets include business processes, patents, trademarks; reputations for ethics and integrity; quality, safety, sustainability, security, and resilience; and comprise 70% of the average company's value. MISSION:INTANGIBLE is a registered trademark of the Intangible Asset Finance Society.

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Walmart: Looming reputational value crisis (again)?

C. HUYGENS - Monday, November 19, 2012
Reputation is what the market--a diversity of stakeholders--expects a company to do, and why it rewards some companies and punishes others. Reputation has measurable value. Reputational value risk is when a diversity of stakeholders holds an institution culpable for failures of one of six business processes (ethics, innovation, quality, safety, sustainability, or security) and then adjusts its expectations as reflected in economically unfavorable actions. Turning to various actions by those stakeholders that create or destroy value:

Customers: They're not buying. Walmart announced that it expects (surprisingly) lower sales revenue relative to peers. Three companies announced earnings and Q4 expectations last Thursday: Limited Brands (LTD), Ross Stores (ROST), and Walmart (WMT). .
Source: Google Finance

Employees: They're not working. Strikes are expected in 1000 stores.

: Don't know.

Creditors: They're not sanguine. Credit default swap prices rose 5% Friday even as the VIX fell.

Equity Investors: They're not happy. Stock price has dropped almost 6% in the past 48 hours. See Customers.

Regulators: They're smelling blood. The company may have violated the U.S. anti-bribery law in China, India and Brazil, according to an internal probe, on top of the Mexican allegations we already know about.

Other indicators...

Reputational Value Metrics
: Integrated measures of stakeholder expectations show reputation stability slipping to the median, rank only slightly above median, and volatility trends showing a recent spike in RVM (a non-financial measure of reputational value) and a negative direction projection for CRR (a relative measure of reputation ranking) within a peer group of 15 discount stores.

Data Source
: Steel City Re Reputational Value Metrics

Media Coverage: The strikes are getting attention in the blog-o-sphere as the public aka, Walmart customers, are now taking notice. The spikes of web searches are matching levels last seen in 2006 when Walmart was reportedly losing 10% of its customers over labor concerns.

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