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Wal-Mart Stores Inc.'s (NYSE: WMT) new Chief Executive Mike Duke will have his hands full once he takes control of the world's largest retailer on Sunday.
For one thing, the economy continues to struggle. Gross Domestic Product fell 3.8% in the fourth quarter, the most since 1982. Consumer spending fell 3.5% in the quarter as unsold goods continued to pile up. Though consumer confidence rose to a four-month high, it was still weaker than expected.
Some have argued that the weak economy benefits Wal-Mart because as money gets tight people are interested in finding bargains. Funny how you don't hear the jokes about Wal-Mart shoppers being low-class much any longer. I know plenty of college-educated people who shop in the store, and without fear of ridicule.
To be sure, though, the Bentonville, Ark. company has said it is not immune to the economic slowdown.
The question facing Duke and Wal-Mart investors is whether the chain can keep these new customers, particularly as Target Corp. (NYSE: TGT) among others try to lure them away with low prices. Moreover, as Reuters notes, the food inflation that helped bolster sales growth in 2008 has moderated.
The company also has to contend with the weakness in the Chinese economy. Last month, the chain offered huge discounts to lure customers to its stores in China. And you have to wonder whether the company's Chinese suppliers will boost prices to Wal-Mart. Will the company then have to raise its already low prices? Those questions are yet to be answered.
One of the biggest challenges Duke may face is in Washington. Support is growing in Congress to make it easier for workers to join unions. When President Obama says that unions are part of the solution and not the problem, that must send shivers up the spine of the strongly anti-union company.
Shares of Wal-Mart actually rose last year, quite a feat for any company, let alone a retailer. But that was then and this is now. There will be no honeymoon for the new corporate chief. Duke is like a beginning swimmer who has been thrown in the deep end of the pool: either he will sink or swim, but he won't have much time to figure out to keep his head above water.
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Reader Comments (Page 11 of 11)
2-03-2009 @ 4:06PM
Bill_is_Rude said...
Let's put it this way , I go to walmart , if needed , if not , I dont shop there . Walmart will NOT get rich off me , I always budget my spending .
I know people who shops at walmart weekly . My sister was griping that walmart raised there food , and anything else they're selling ..... Buy only your "wants " not needs. Every store raised there prices , they will continue too . I rather keep the money in my pocket , and I don't need everything nor would I want everything , I'm not one of those " AMERICANS " who's spoiled.
Whoever started that saying " AMERICANS are spoiled , I like to put my fist in his / her mouth ......That's made up b/s .
2-04-2009 @ 5:43AM
tsrod said...
Where does this reporter get his facts? Wal-Mart shoppers are still low class, trailer trash, un-American traitors. If you want the American economy to recover, you MUST avoid supporting these evil giant stores that are forcing manufacturing jobs out of the United States. Shopping at Wal-mart = more layoffs in the U.S.
2-03-2009 @ 6:08PM
mgb477 said...
some of you need to check your facts about walmart. they have excellent benifets for employees and have fair wages for employees and oh yes the do promote women to higher positions. the employees that gripe about working for walmart would probably gripe about any job they have. i work for walmart and i love my job and make enough to support my family. so check you facts and quit bashing walmart. one thing i know for sure there are sure a lot of people who shop there and all the target stores in my area (about 5 ) are always empty no matter when i go in to them. i personally think target is very over priced for the things they sell. i love my walmart.
2-03-2009 @ 6:49PM
gary said...
Everyone who shops at WalMart can take partial credit for that loud sucking sound as American dollars continue to flow to China, who by the way are buying the bonds we r selling to borrow the $ for the rip off bail outs! How ironic...
2-04-2009 @ 1:19AM
jen said...
when i want a good bargain i shop at salvation army. i bought a gucci purse for 3 bucks also prada. plus the clothing quaility is better then walmart. walmart has holes in shirts and dirt and thread comming out of clothes.