Wal-Mart (NYSE: WMT), a retailer that competes with companies such as Target (NYSE: TGT), Sears (NASDAQ: SHLD), and Costco (NASDAQ: COST), issued what I thought was a decent Q1 report. Sales may have been affected by currency effects, but overall, the giant chain seems to be holding up reasonably well.
Revenues dipped 0.6%. The company earned $0.77 per diluted share. No, the bottom line didn't do great in terms of earnings growth. Last year at this time, Wal-Mart made $0.76 per diluted share. That extra penny does not connotate excitement, I can tell you that. But shareholders can comfort themselves by the fact that Wal-Mart came in at the high end of its own guidance. Wall Street analysts pretty much agreed that the business would make about that much.
Of course, the statistic related to same-store sales is where the action's at when it comes to a retailer's earnings release. Wal-Mart ably defended its standing in this regard, as domestic comps rose 3.7% excluding fuel transactions. This was an improvement over last year's showing. Both Sam's Club and Wal-Mart itself saw nice increases in their respective comps.
Net cash from operations, unfortunately, slipped a little. And capital expenditures went up. I actually like to see the opposite scenario, but it won't happen every quarter. Wal-Mart is actually doing relatively fine right now when it comes to cash flow. In fact, the retailer saw fit to increase its dividend by double digits a couple months ago.
I think the Wal-Mart story remains intact. No, the company didn't close the book on the best quarter ever. But it's hanging in there. Wal-Mart is hitting its target demos. Consumers who want to stretch their dollars have been primed by the company's merchandising and marketing schemes to perceive that they can get a good value inside one of the company's locations. And, for whatever it's worth, Ben Stein loves Wal-Mart!
You may love to shop at Wal-Mart the store. But should you love Wal-Mart the stock? Long-term, the answer is probably yes. Short-term, the answer isn't so clear. The stock is up on the year-to-date frame, but it has weakened a little recently. And, as I write this, shares are down 2%, although not on terribly huge volume (not yet, anyhow). I think Wal-Mart might head to the downside from here, maybe essentially follow the market as a whole. I just don't see a lot of interest in the stock. We'll have to see what future quarters bring in terms of data and price action.
Disclosure: I don't own any company mentioned; positions can change without notice.
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Reader Comments (Page 1 of 1)
5-15-2009 @ 2:57PM
Bob said...
WalMart imports ~$14 Billion dollars each year from China, at the expense of our domestic manufacturing base.
WalMart is the sales agent for China. With their human rights issues, and pollution concerns it is obscene that this continues.
Offer WalMart tax incentives to build a Super Store, and within one year the local Kmart will go out of business. Did they offer the Kmart the same tax incentives to remain in business?
So many times you see a deserted downtown area. After the department stores and local grocers move out, the stores that repopulate our downtown areas are tatoo parlors, pool halls, and resale shops.
People do not buy more groceries and toilet paper just 'cause there's a WalMart Super Center in town.
My disgust with WalMart is in their purchasing and employment polices.
WalMart's ruthless purchasing policies has brought our domestic manufacturing to its knees.
I understand WalMart demands that each year a manufacturer sell their products cheaper to WalMart, or WalMart will manufacture the same item in China. Our margins get squeezed to the point where we can no longer pay a living wage, and WalMart pulls the production rug out and our neighbors are now unemployed.
Sure China makes stuff cheaper at the cost of human rights, and air, water pollution. China closed their (state subsidized) steel mills in advance of the Olympics to give their air a chance to clear up.
Similarly, WalMart has little regard for their employees. Full time employment at WalMart is 32 hours a week = Less than a living wage.
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China manufactures at prices less than their cost of production.
China is communist and only after our US dollars.
WalMart is China's biggest sales agent!
Buying American Made Products Will Keep Your Neighbor Employed !!!