NEW YORK CITY—Some major retail players have some serious work to get back on track, with Wal-Mart leading the list, said JP Morgan retail analysts at the company’s Consumer and Retail Holiday Conference, concluding here today. Weak November sales are just the beginning of the discount giant’s woes, problems that management are not fully addressing, said Charles Grom. The analyst tracks the stock for New York-based JP Morgan, and rated it “neutral.”

“We think there are deeper issues here. Is Wal-Mart losing market share to the food retailers?” Grom said. “And has its attempt to upscale alienated its customer? We think it may have.”

Wal-Mart’s apparel, including its more upscale George collection, has not been successful, the panel said, and its organic food offerings are not drawing shoppers from Whole Foods, which is a different customer base. Meanwhile, renovating stores to look more upscale may scare off lower-end shoppers.

“If they’re alienating the core customer base and not bringing in the upscale customer, they’re caught in a tough place,” Grom said.

The problems are fixable, if the chain focuses on them.

“I would cut square footage growth more than they have cut it. And, if anything, I’d reallocate [those funds] to growing their neighborhood stores. They should stop international expansion to a certain degree and focus on the problems at home,” Grom said.

Wal-Mart is not alone among once high-flying chains now facing problems. Home Depot’s stock price continues to lag and Chico’s is slowing down.

Home Depot stock was at about $44 per share when Robert Nardelli took the company’s reins as chairman, president and chief executive officer in 2000. Now, it’s languishing at around $38 per share. Home Depot is starting to turn around, but “the $350 million investment it is finally making [in renovating its stores] is small,” said Stephen Chick, hardlines analyst. “I hope it will be double or triple that next year.”

The stock remains attractive because of its high dividend yield, but he said that 2007 will be a transitional year for the home improvement chain.

Chico’s is introducing a children’s line, which is “not a good sign,” said Brian J. Tunick, softlines analyst.

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