Walmart Faces New Accusation, Agrees to Settle Lawsuit - Analyst Blog

Wal-Mart Stores Inc. (WMT) has always remained under media scrutiny due to its size and scale of operations. After the recent accusation of running false advertisements and over-charging customers in New York for products of The Coca-Cola Company (KO), the retail giant is now asked to settle a negligence lawsuit by actor-comedian Tracy Morgan.

Per the complaint filed by Morgan and the three other plaintiffs in Jul 2014, Walmart truck driver Kevin Roper crushed Morgan’s limousine bus on the New Jersey Turnpike on Jun 7 when Morgan was returning from a stand-up comedy show at Dover Downs Hotel & Casino in Delaware. The accident led to the death of one comedian who was with Morgan, his personal assistant and another comedian. Morgan was hospitalized and had multiple surgeries, and will even have to undergo outpatient therapy. The other two also suffered several injuries due to the accident.

Investigators found that Walmart’s truck driver was speeding and hadn’t slept for at least 24 hours. According to the National Transportation Safety Board, the truck driver was driving at 65 miles per hour (mph) in an area where the speed limit was 45 mph due to construction. He has been charged with death by auto and assault.

Initially, Walmart counter-claimed that the injuries were caused as Morgan and the other plaintiffs were not wearing their seatbelts. However, last week, Walmart agreed to resolve all of the remaining issues resulting from the accident.

We have noted that Walmart is always accused for something or the other. Last month, it had to pay a penalty of $66,000 for charging higher prices for Coca-Cola soft drinks than stated during promotions. (Read: Walmart to Pay Penalty for Overcharging Coca-Cola Products.)

Walmart has also been accused of labor disputes, breaching food safety measures, as well as bribery charges in the past. Walmart was even accused of violating India’s Foreign Exchange Management Act regulations in relation to the company’s plan to set up stores in India. Such allegations significantly impact the company’s reputation and severely hurt investor confidence.

Walmart currently holds a Zacks Rank #3 (Hold).

Other Stocks to Consider

Some better-ranked retailers worth considering include Citi Trends, Inc. (CTRN) and Foot Locker, Inc. (FL). While Citi Trends sports a Zacks Rank #1 (Strong Buy), Foot Locker holds a Zacks Rank #2 (Buy).

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