Wal-Mart's Announcement: Good News?

It seems ironic that Tuesday morning's rally is being credited to Wal-Mart (WMT) for their "better-than-expected" profits (See Results) and a hint that the holiday shopping season "might be stronger than anticipated." Ironic in the sense that the market is getting reassurance from a brand known for their low prices and lower/middle-income customer.

Wouldn't a profit increase from a low-cost store be more conducive to harder times for middle America and the possibility, rather, in all likelihood, the probability, of a recession?

I'm betting Wednesday's PPI and Thursday's CPI data will erase Tuesday's gains.

Comments

[kelvinliao]

I have the same opinion. When people are going to tighten their spending budget, they typically choose low-cost stores. If the boost is from Target, then it is a different story.

[elwind45]

The reasons for the good news is a complete myth. Company gains on backloaded new store openings (close to xmas) sales per sq foot have been droping for sometime now. The company is having great success replacing fulltime help with parttime workers (great). Within report store traffic has been down alot. Company hopes press will increase interest in shopping during xmas. The company is really using bait and switch marketing. Guiding the same sales growth 2% during fourth quarter is not sign of improvement. This company should be alot better at marketing. The company hopes to attract higher income consumer due to the price alienation of its core lower income patron. The prices within walmart are out of control. The hope is that the price will be less offensive to a higher income consumer. The past attempt to expand its consumer base was out of desperation. The company has no system to control cost without replaccing fulltime workers. A cycle of ever lower returns is being covered by "happy talk" and nothing more. choking the golden goose continues in earnest!