Wal-Mart thrives in economic storm
The pieces are all falling into place for a great year for the nation's top retailer.
The ingredients are all there, and that's why analysts with Stifel Nicolaus have upgraded the stock to "buy." The company will succeed even in a slowdown in consumer spending, analysts said.
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Investors have clued into this for months now. That's why, after languishing for years, Wal-Mart shares have shot up 46% in the last year to close Monday at $74.28.
In some ways, Wal-Mart will see a repeat of 2008, a year in which Americans felt the pressure of high gas prices, food inflation and a crumbling housing market. This year isn't an exact repeat -- gas prices are low and the housing market is slowly recovering -- but there are other factors weighing heavily on consumers' minds. Some tax cuts are set to expire at the end of the year, and federal spending cuts may take place weeks later.
Wal-Mart did well in both years. Stifel analyst David Schick said his company's survey showed that more people are making weekly visits to the store. He upped his earnings estimate for the second quarter to $1.20 per share from $1.17 a share, and also hiked his full-year estimate to $5.09 a share from $4.97 a share.
He thinks the company's share price could rise to $83 in the next year.
Wal-Mart went into a spiral after 2008. It reacted to the recession badly and made some unwise moves aimed at grabbing wealthier customers that may be trading down. It cut its selection, rearranged its aisles and upped some prices. It was blindsided by the consumer shift to dollar stores for household goods. It continued focusing on super-sized bundles when shoppers couldn't afford them.
As a result, U.S. sales slumped for nine straight quarters. Management finally reversed that trend by making some key decisions, such as dumping its promotional pricing experiments and returning to its "everyday low pricing" model.
The new strategy is working. Gas prices are low, giving lower-income shoppers more cash to spend. Shoppers are very price-focused in this election year. And finally, Wal-Mart is benefiting from the management problems at JC Penney (JCP) and Sears (SHLD).
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Their carts are sticky, the wheels on EVERY cart are busted up and you make a racket when you're going through the store. I have to consciously remember NOT to touch my face because there are no wipes to clean the handle of the carts when you get one, otherwise i'm sure i'd get sick the next day. I was there once and saw what appeared to be smeared sh!t in one of the isles and i would have continued to think it was if it wasn't for the lack of smell. Some lady almost stepped right in it because she was too busy texting on her "dumbphone" before i warned her. There was also a busted open tube of crescent rolls or something that looked as if it had been kicked around on the floor all day without anyone bothering to pick it up and put it in the trash can that was 10 feet away till i came along and did it.
They could hire more cashiers but that's not good for their penny pinching bottom line. The people that work there look depressed and overworked, and most of the people that shop there push the limits of what is defined as being a human both in intelligence and appearance.
Walmart is a dump plain and simple and i dread having to go there for anything.
Sam Walton made Wal-Mart, his children made it a sweat shop.
The Article states gas prices are low at least 2 times. . Where do you buy gas? It seems to be near an all time high in Missouri where I live. Wal-Mart's low prices are only lower when the same item is not on sale at any other store, if you shop around you can always find prices as low or lower the Wal-Mart and you will help keep compitition, to keep the WalMart monopoly in check. Shop around, you can find better prices and better merchandise any day of the week. The cheapest price for a lower quality item does not always mean the best product for you..
WELFARE or WORKFARE?
Try going to China, Korea, Japan or ANY other country in the world and ask for food stamps and welfare! Are you kidding me! It'll NEVER HAPPEN. Yet we continue to give away free cash to all these illegal immigrants as well as all the lazy **** Americans who don't want to work and live off the generosity of our tax paying citizens. We are supporting the drug and alcohol habits of all these s****ing maggots and they just keep multiplying like roaches because hey know the more they multiply, the more money they get.
If we only made these people become constructive and work for their foodstamps and free handouts, we could again compete with these other countries as far as production of consumer goods as well decreasing our dependance on foreign goods, which would also help reduce the slave labor in other countries as well. And any imports that continue to come into this country should be highly taxxed, with AMERICAN companies getting tax incentives to operate and produce efficiently and competitively.
With that, all these MegaStores that are thriving on the cheap foreign product might once again have competition and the Mom & Pop stores that this counrty was built on will resurface, bringing this country back to it's glory day of domination in production and GNP (Gross National Product).
Walmart, thriving? Perhaps. However, take a really good look at the stores. Inside them. Chat up some of the sales associates. Pay attention to who works there, and if they have badges with years worked on them. i did work for them for a while, so perhaps I see more than most people.
The turn-over rate of employees is high. I have even seen ads for workers in the local paper. And yet people are looking for work. Why not at Walmart?
Just a snap shot here. While I was there, (and things were better then, about a year ago), there were never enough cashiers. Never. And we worked hard. You were videotaped, and your production was monitored through the register. Customers were unhappy and so were we. There are never enough sales associates. Try finding someone to help you with jewelry, pets, hardware.
If you go there fairly often, check out which lanes are open, and which are not. You'll see that some lanes are never used. That is because the scanner, the register, or card scanner isn't working. And it doesn't get fixed. Why? And there IS a lot of talk about the Made in China labels. We don't like selling these products, we'd rather sell American. Why can't that be done? People buy there because that is what we can afford these days. Myself, I buy my staples at Aldi's first, then Walmart, and then anything else at my local grocery.
if you do talk to some sales associates on a regular basis, you'll find that not only are there only part time jobs, your hours are all over the place so that you can't have another job. You need two jobs to make it if you ar young, if you have kids, if you are older (no more greeters), if you have medical bills.
There are problems within, and I would be cautious about their stock.
Companies like Wal-Mart, Target, Kroger and ShoppersValue will only get better as the middle class gets weaker and has less spending power, not so much because of inflation, for that has been dropping since the 80's, but because of lower wages and benefits. The American consumer would like to buy better quality, but just can no longer afford it. Like it or not America has entered the stagflation zone, and it will take tax reform and more government spending to pull us out.
That could possibly change as Chinese labor becomes more expensive, but countries like India, Pakistan, Brazil and Bangladesh will always be there to provide a cheaper work force so I wouldn't hold my breath for dramatic wage increases in the U.S. anytime soon. It's not only in the U.S. but EU workers are suffering the same fate with low wages, high unemployment and a banking system determined to take it all.
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