Business Model Analysis of Wal Mart and Sears While both companies belong to the retail industry (where sales of products and services are the source of business), Sears and Wal-Mart have very different business models. By carrying out a shareholder return analysis you can see that although both companies have similar returns, the source of this return is different. As shown in the table above, both companies have returns on equity close to 20%, although the source of profitability differs between them. In the case of Sears, the main source of value creation is the turnover of real estate assets. This high turnover can largely be explained by its debt financing, as assets represent a smaller portion of assets. Wal-Mart, for its part, experiences a high turnover of assets on its sales. This business model product focuses on selling high volumes, thus increasing the profitability of your businesses. Observing the ratio (total liabilities/assets) of both companies, a ratio of 5.93 times is evident in the case of Sears, while in Wal-Mart, it is 1.38 times. Given the above and considering the increased risk associated with debt, the profitability requested by Sears shareholders should be greater than that requested from Wal-Mart. During fiscal 1997, Sears derived much of its business (55% of its total sales) from selling its own branded credit cards, creating a finance business that that same year accounted for 48% of operating revenues. In turn, sales of products and services grew by 8% compared to the same period of the previous year, but there was no reorientation of its premises, reducing the share of Full Line stores, based on the retail sales (78% of the physical space available for sale), and giving space to the growth of the Home Store chain (they offer more specialized products), which almost tripled the square footage of its stores between 1995 and 1997. In fact, in In the period from 1995 to 1997, Sears showed a shift in the distribution of its premises, with a growth in smaller premises (Home Stores) and a reduction in larger premises (Full Line Stores and Auto Shops). The Home Stores showed growth of 8% of the total number of premises, of approximately 5% of the total surface area and of 6% of the total sales surface area. For their part, Auto Stores and Full Line Stores recorded a decline of 6% in total premises, 4% in total surface area and 5% in total sales surface area..