AOL Money & Finance

Wal-Mart vows to buy back shares and keep recession customers

More

Wal-Mart Stores Inc. (NYSE: WMT) has fared better than just about anyone in the recession, but its stock is down 9% so far for 2009. Why? Wal-Mart shares outperformed the market by a wide margin in 2008, but now that many investors are looking to prepare their portfolios to profit from a turnaround, there is concern that Wal-Mart will be unable to sustain its momentum once people spend more money.

To capitalize on the stock price pullback, Wal-Mart announced that it would spend as much as $15 billion to buy back its own stock. And at the company's annual meeting on Friday, recently-installed CEO Mike Duke said that "Our customers will stay with us when this economy turns around and they have more discretionary spending, I promise."

The Wall Street Journal (subscription required) reports that Mr. Duke also expressed his interesting in moving the company in a more socially-conscious direction, including a concerted effort to promote more women into the company's executive ranks.

But the most important question for shareholders is the first one: Given that Wal-Mart performed exceptionally well during a time of economic hardship, how likely is that the company will underperform when the economy strengthens? I'd say it's extremely likely, and that the promises of a CEO at an annual meeting should, as Catullus wrote about the words of a woman in love, be written in the sand and running water.

Wal-Mart has benefited from a tradedown effect, but remember that this is America. As soon as we have enough money to shop at higher-end stores, shop at higher-end stores we will.

Reader Comments (Page 1 of 1)

Symbol Lookup
IndexesChangePrice
DJIA+30.6910,464.40
NASDAQ+6.872,176.05
S&P 500+4.981,110.63

Last updated: November 26, 2009: 04:31 AM

BloggingStocks Exclusives

Hot Stocks

DailyFinance Headlines

Latest from BloggingBuyouts

TheFlyOnTheWall.com Headlines

    BioHealth Investor Headlines

    WalletPop Headlines

    My Portfolios

    Track your stocks here!

    Find out why more people track their portfolios on AOL Money & Finance then anywhere else.

    BloggingStocks Partners

    More from AOL Money & Finance

    WalletPop Headlines