Tax stimulus checks aiding Wal-Mart

If Wal-Mart's speculation is true and its June same-store sales figure was lifted 5.8% from the year ago's June period on the backs of customers using much of their tax stimulus checks, that gravy train will run out soon. So far this year, Wal-Mart has had great success growing its sales. As customers apparently are seeking shelter in lower retail prices, Wal-Mart's battle-tested formula of being the greatest supplier to this demand has helped it tremendously.

Instead of pricey mall shops and SUV travels all over the city to pick up this-n-that, many customers have shunned their SUVs for smaller, more fuel-efficient cars and are trying to get as much shipping done as possible at one location. Since Wal-Mart is a virtual mall under one roof -- and one that can allow you to "Save Money" and "Live Better" -- customers are recognizing this. They are swallowing Wal-Mart's prescription for low prices in addition to buying those now-famous $4 prescription drugs.

With these tax stimulus checks adding $600 to $1,800 to the pocketbooks of many American families, what did you do with yours? Unless you were living paycheck-to-paycheck, you may have saved at least part of it for a "rainy day" in the future. Many of you, though, are choosing to spend some of that free cash at Wal-Mart. Since Wal-Mart won't break out just what categories are seeing sales spikes, I wonder if food or flat-screen TVs are seeing a boost?

The tax benefit can't help Wal-Mart forever

As long as Wal-Mart can continue upping sales every month, the analyst community may not care how it is going about it. But make no mistake -- the tax stimulus situation won't last forever. When it dries up, Wal-Mart may need more coal to keep the fire going. An interesting twist in terms of growing sales may come from Wal-Mart soon as a way to keep the fore warm. Martha Stewart Living Omnimedia, Inc. (NYSE: MSO) -- or MSLO as I call it -- said that it will join with Wal-Mart starting this month in selling a large portion of its crafts line in Wal-Mart stores.

MSLO was, in 2002, one of Kmart's largest names in terms of a partnership that beckoned in housewives and home furnishings buyers into those stores. When Kmart declared bankruptcy years ago and was merged with Sears into a new company called Sears Holdings (NASDAQ: SHLD), it was interesting that MLSO did not immediately partner with another large discount chain to keep that rapidly growing part of its business on fire.

It seems that along with unique partnerships like this one and growing grocery sales in a unique way (from local vendors) are indeed great ways to really ensure Wal-Mart continues its growth trajectory even as the customer spends less from that tax stimulus check as we head into fall soon. The Wal-Mart customer, however, won't stop hurting.

Commodity prices and gas prices are starting to settle into reality (i.e., that tank fill-up is now "normally" $75 instead of $45), and customers are going to continue seeking solace in low prices wherever they can get them. If the situation changes the disposable income almost overnight, customers are at least smart in that their habits change along also -- and that means an almost "forced" trip to Wal-Mart on an increased basis. So, yes -- the rest of 2008 should see Wal-Mart with decent if not impressive sales almost every month that is left.

The timing could not have been more perfect

As Wal-Mart locations begin to saturate much of the U.S., the retailer has turned to international growth to aid its overall corporate growth, and the strategy is working. Although Wal-Mart left the South Korean and German markets in 2006, it has become heavily invested in the red-hot Indian and Chinese markets as investments last year in Bharti and Trust-Mart (respectively). Still, the U.S. economy, while technically not in a recession, has American consumers scared out of their pants. Result: sales from existing Wal-Mart locations are sailing along just fine.

A customer can even purchase the gas to get back home right in the parking lot of many Wal-Mart Supercenters. Needing dry cleaning done? How about your nails, ladies? Making a deposit into your bank account? All of these activities can be done under a single Wal-Mart roof. At least temporarily, gone are the days of specialty (and expensive) shopping at mall retailers and the social aspect of that experience and in are the days of getting almost all your needs taken care of with one discount retailer with one trip.

With WMT shares sitting at just over $56 per share as of Friday's close, it would not be foolhardy to suggest that the retailer's shares soon peak above $60 for the first time in over five years -- and stay there. Although the Dow and other market components tanked this past weak, Wal-Mart really shouldn't be going with them. For now, the world's largest retailer is sowing the seeds of refuge from customers hiding from so many high prices hitting all at once.

We have half the year left and my guess is that Wal-Mart will have one great month after another. What do you think? Leave a comment below and speak your mind.

Thanks for tuning into the latest edition of The Wal-Mart Weekly. Stay tuned right here this time next week for the next edition, and until then, have a safe week!