The incident occurred Thursday at the store in the 2300 block of North Tustin Street.
Orange police said the unidentified man exposed his private parts to the young girl and then fondled himself. The victim later told authorities that the suspect also touched her inappropriately.
"This suspect at one point actually rubbed up against the victim, which makes it an even more serious crime," said Sgt. Fred Lopez with Orange Police. "So now, instead of just looking for this male for indecent exposure, he's wanted for sexual assault on a minor under 14 years of age."
Authorities say the girl was shopping with her grandmother in the women's clothing section, when the suspect approached her several times.
A surveillance camera caught the suspect walking out of the store right after the young girl ran to tell her grandmother.
Shoppers were shocked that something like this would happen at their neighborhood store.
"This is my store. This is my Wal-Mart, where I shop all the time," said Livia De Los Rios of Yorba Linda. "I heard it on the news last night on Channel 7 and I was just shocked."
Police believe this may not be the suspect's first time committing such a crime.
The suspect was described as a Hispanic male, between 30 and 40 years old, approximately 5 feet 10 inches tall, with short dark brown hair. Authorities believe he was seen driving away in a a dark colored Honda Accord.
Anyone with information about this indecent exposure case asked to contact the Orange Police Department at (714) 744-7444.