Most Popular
1. Dow Max Drawdown Bear Stock Market 2022 - Accumulating Deviations from the Highs - 21st Feb 22
2.Putin Starts WW3 in Ukraine, Will Use Tactical Nuclear Weapons, China Prepares Taiwan Blitzkrieg - 28th Feb 22
3.World War 3 Phase 1 - Putin WINS Ukraine War! - 25th Feb 22
5.Will There Be A 2024 US Presidential Election? - 3rd Mar 22
6.Gold and SIlver, Precious Metals Sector Is at a Terrific Buy Spot - 6th Feb 22
7.Why Putin Wants the WHOLE of Ukraine - World War 3 Untended Consequences - 6th Feb 22
8.Dow Stock Market Expected Max Drawdown 2022 - 19th Feb 22
9.Stock Market Calm In the Eye of the Inflation Storm - 4th Mar 22
10.M = F - Everything is Waving! Stock Market Forward Guidance - 7th Mar 22
Last 7 days
Britain's Hyper Housing Market - 27th May 22
Lower Copper price due to Chinese lockdowns is only Temporary - 27th May 22
How the United States Conquered Inflation Following the Civil War - 27th May 22
Greater Depression Now!? - 27th May 22
Stocks: Is the Really Scary Part Just Ahead? - 27th May 22
The Dark Side of the Internet - Cybersecurity - 27th May 22
Why Ray Dalio is WRONG About China - Principles for Dealing with the Changing World Order - 24th May 22
Globalists Convene to Plan Central Bank Digital Currencies - 24th May 22
After Recent Highs, What’s Next for the Gold Junior Miners? - 24th May 22
Why APPLE Could CRASH the Stock Market! - 21st May 22
Why Is Crude Oil Ignoring US Inventories? - 21st May 22
Here is Why I’m Still Bullish on Gold Mining Stocks - 21st May 22
US Real Estate Investors – Is There An End In Sight? - 20th May 22
How Technology Affected the Gaming Industry - 20th May 22
How To Set And Achieve Reasonable Goals For Your Company - 20th May 22
How Low Could the Amazon (AMZN) Stock Price Fall? - 19th May 22
Bitten by FANG? Clocked by Cryptos? -- 'Air Pockets' Everywhere - 19th May 22
Northern General Hospital Orthopedics Fractures and and Ankle Clinic Consultations Real Patient Experience - 19th May 22
Cathie Wood Goes All in on Teladoc, ARKK INSANE Noob Investing Strategy! - 17th May 22
This is Anything but Positive for US Housing Market - 17th May 22
What Should We Do If There Is No Fed Monetary Policy Pivot? - 17th May 22
All Possible Ways to Earn Free Litecoin - 17th May 22
How low Could the Amazon Stock Price Fall? - 16th May 22
Cathy Wood ARKK INSANITY There is NO Coming Back! - 16th May 22
NASDAQ 100 Stock Market LOWER LOWS & LOWER HIGH - 16th May 22
Sanctions, trade wars worsen US inflation - 16th May 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Disappearing Consumers Hit Wal-Mart Sales and Profits

Companies / Sector Analysis Aug 15, 2009 - 12:57 PM GMT

By: Money_Morning


Bob Blandeburgo writes: The much-anticipated earnings report from Wal-Mart Stores Inc. (NYSE: WMT) and new data from the U.S. Department of Commerce yesterday (Thursday) showed that consumers are not only reeling in their discretionary spending, but may also be pulling the reins on the necessities.

Retail sales fell 0.1% in July from the previous month, and 8.3% from a year ago, the Labor Department said. Excluding auto sales, the sales declined 0.6%. A Bloomberg News poll of 76 economists projected sales including autos to rise 0.8%.

Grocery stores, where consumers find many necessities, saw their sales decline to $43.74 billion in July, down 1.4% from June's $43.87 billion.

The drop in sale reflects the still-shaky sentiment of consumers.

"Until we start seeing job growth, consumers are still going to be very cautious," Michael Gregory, a senior economist at BMO Capital Markets told Bloomberg. "It's premature to talk about the sustainability of a recovery," he said, until there's "follow-through on the demand side."

Wal-Mart, the world's largest retailer, saw its sales drop 1.4% to $100.08 billion in the three months ended July 31. The company's profit fell to $3.44 billon from $3.45 billion a year ago. One of the reasons for the decline was a stronger dollar, which shaved about $4.2 billion off of the company's revenue. Excluding currency exchange rates, Wal-Mart's revenue actually climbed 2.7% to $104.28 billion.

However, a dearth of consumer confidence was also evident in the retail giant's overall same-store sales, which fell 1.2%. Wal-Mart had expected same store sales to remain flat or gain 3%. Only its Sam's Club discount stores held true to the estimate, showing an increase of 0.6%. Sales at Wal-Mart outlets fell 1.5%.

The gain at Sam's Club, where consumers pay $40 a year to buy everyday items like shampoo and toothpaste at bulk prices, shows how club stores offer a better value proposition than Wal-Mart's namesake outlets. For instance, a tri-color ink cartridge from Hewlett-Packard Company (NYSE: HPQ) that costs $39.97 at Wal-Mart sells for $33.84 at Sam's Club, a savings of nearly 16%.

"Our customers are more disciplined in their spending," Wal-Mart Chief Executive Officer Mike Duke said in a conference call with investors, adding that consumers are saving more and spending less.

The Reuters/University index of consumer sentiment dropped to 66 in July from 70.8 the month before, Bloomberg reported. The Conference Board's Consumer Confidence Index fell to 46.6 in July, down from June's 49.3.

With consumer confidence and spending waning, the coming months, particularly the October-December holiday shopping season, retail sales may see growth in Sam's Club and other warehouse stores like Costco Wholesale Corp. (Nasdaq: COST) and BJ's Wholesale Club (NYSE: BJ).

Same-store sales at Costco shrank 2% in July, while growing 5% at BJ's. Costco blamed the decrease on less discretionary spending but noted its strongest categories included food and fresh food products, including deli, candy and frozen food items. BJ's reported gains in similar categories.

Why Is Beijing Investing $200 Billion in One Company? The answer is simple. This rail company hauls 25% of the world�s freight � but it only has 6% of the world�s track. Right now, freight supply is 65% shy of demand. Sales for this company have grown on average 47% over the last five year. And now, with a $200 billion infusion, it�s about to jump even higher. Estimates show the potential gains at 356%. Click here for the full report.

Money Morning/The Money Map Report

©2009 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email:

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in