Wal-Mart has company in Wall Street's doghouse
The discount giant joins other big chains in posting disappointing results and tepid outlooks. But it seems to be faring worse overall.
Heading into the critical back-to-school season, Wal-Mart (WMT), Kohl's (KSS) and Macy's (M) have all recently reported disappointing quarterly earnings. Consumers don't appear to be moving online, either. Amazon (AMZN) the world's largest Internet retailer, also posted results that lagged Wall Street's expectations. The reasons for retailers' struggles are hardly a secret.
Although it's trending downward, the unemployment rate remains stubbornly high at 7.4%. Lower-income consumers are being pinched by a 2 percentage point increase in Social Security taxes. Consumer confidence fell in July from a five-year high, indicating that wealthier Americans aren't feeling flush with cash, either, although more are buying big-ticket items such as cars, homes and appliances because borrowing costs remain low.
In theory, this should be Wal-Mart's time to shine. Under CEO Mike Duke, the Bentonville, Ark., company has relentlessly pounded the message into the subconscious of consumers that it's the low-price leader. But as Thursday's earnings reports shows, that message may not be resonating with consumers.
Not only did the retailer miss Wall Street's expectations, but it also said earnings for the rest of the year would be worse than analysts had expected.
While other retailers are facing the same issues, they appear to be handling them better than Wal-Mart.
For instance, the discount giant reported a 0.3% drop in U.S. same-store sales (sales in stores open for at least a year) in the most recent quarter. Analysts had expected a 0.9% gain. Kohl's, which also reported earnings on Thursday, had a 0.9% jump in that critical metric. And while Macy's same-store sales fell 0.8% in the most recent quarter, it expects to generate gains of 2% to 2.9% this year.
Addressing Wall Street analysts on today's earnings conference call, Duke tried to sound an optimistic note, saying "We expect to see improvement in all of our segments in the back half of the year."
Indeed, consumers responded favorably to its fresh produce, and its apparel and home goods categories rebounded in the quarter. The company also has high hopes for its e-commerce business. Investors, though, are going to want deeds to back up Duke's words heading into the critical December holidays.
Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.
Walmart's aisles are cramped and there's usually merchandise strewn across the floors. The produce is often rotting, they never have sales like other stores do. The employees are mostly abused and miserable. Why would anyone shop there if they have an alternative?
I don't shop in Wal-Mart hardly at all anymore. I've been in a Wal-Mart twice in the last three months and I couldn't hurry fast enough to get out of there. They don't have the item stock, or it's higher priced than elsewhere. I also hate long check out lines, so no I am not going there. I can also sense the employees have no interest in working there and the so-called fresh vegetable re not so fresh.
I am very sorry but how on earth does Wall Street and Our Government expect people to spend when all extras to spend are going into the gas tank!
With gas prices so ridiculously high and with the board members of gas corps and their CEO CFO COO's taking home millions in annual bonuses How and WHERE On this COUNTRY'S Earth are supposed to find extra funds to spend at Dept. Stores.
When it al goes into the Gas tank and with ever increasing cost of food---where are We Americans supposed to find the money to spend on clothes and supplies?????
Someone please tell me where the excess funds come from with the ever rising price of food and gas!
I hate Walmart and all it is. Minimum wage are you kidding me. And you , hey you, my fellow Americans, stop letting companies screw your fellow citizens. You just say " they can work somewhere else if they don't like it" . Jerks
If everyday people don't have money the economy can't grow. The 1% don't put money into local economies, you and I do. Be a job creator and mail a letter every once in awhile to your Grandma or mom. Jeez E Bills are killing the Post Office. Come on People, hang up your stupid phones and participate.
walmart doesn't have anything to sell, the shelves are mostly empty. They will be history
in 5 years
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] The major averages began the new trading week on a slightly lower note with small caps leading the weakness. The Russell 2000 shed 0.3% while the S&P 500 slipped less than a point with six sectors ending in the red.
Equity indices began the day in negative territory with only the Nasdaq (-0.04%) making a very brief appearance in the green. After sliding through the first hour of action, the major averages reversed and spent the remainder of the session climbing off ... More
More Market News
Like many companies this winter, the fast-food giant blamed a drop in same-store sales on the weather. But could its problems be bigger than a snowbank?
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'