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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Worked quite a while for Wally, got out when certain benefits were fixing to kick in for the time I worked there, just because I saw the "change" coming. This is sure as h___ NOT Sam's store, and no I'm not from his time. In Sam's time they poured money INTO the US economy(not china's), shared with the associates, had good benefits, and gave to charity. I see Walmart kept 6 BILLION dollars and counting that would have stimulated the economy, froze associates pay and drove countless middle class american people with families out who had knowledge to benefit the customers. In place of LOW paying/ NO benefits positions they made up; or expected the managers to "figure" a way to do the job with not NEARLY the amount of people they really needed (and yes, they knew there wasn't enough people, we just don't TALK about it and the customers WILL be trained to accept it). They kept telling associates in meetings "You don't need someone talking for you" (unions, their evil, train the associates), who's listening to you NOW?!. And make sure you tell everyone not to vote for the party that supports unions (district HR actually said that). Too big to fail or care about anyone but their profits. "Hey, it's business and the economy we helped to TRAIN to go our way, made it alright to screw EVERYONE. Until the consumer changes (find other local places to shop), we don't need to change!.
Also they've got some bounses and some golden parachutes to pay; that's all that matters!.
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.
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