Walmart (WMT)

[millionairemind]

People are now shopping at Walmart now instead of the more expensive stores ?

From what I have read, now "thrift" seems to be the IN thing. It's fashionable to show how "cheap" you can get it. Conspicuous consumption is out, at least for now.

[winston]

Actually, it's not too bad becuz of the strong Dollar and Stimulus checks last year ...

Walmart earnings better than expected

SAN FRANCISCO (Reuters) - Walmart Stores Inc reported roughly flat quarterly profit as the strong U.S. dollar lowered the value of its international sales and it faced tough comparisons with last year, when shoppers spent U.S. government issued stimulus checks in its stores.

The world's biggest retailer, which has dropped the hyphen from its name and now calls itself Walmart, also said sales at its U.S. stores open at least a year fell 1.2 percent percent. Wall Street on average expected a gain of 0.85 percent.

Quarterly net income was $3.44 billion compared with $3.44 billion a year earlier, while earnings per share rose to 88 cents from 87 cents. Analysts on average were expecting 85 cents a share, according to Reuters Estimates.

For the current, third quarter, Walmart expects earnings per share from continuing operations of 78 cents to 82 cents.

For the 13 weeks ended October 30, it forecast Walmart U.S. same-store sales to be between flat and up 2 percent, with same-store sales at its Sam's Club to be flat, plus or minus 1 percent.

[winston]

Wal-Mart CEO on the dismal state of the consumer From 24/7 Wall Street:

Wal-Mart Stores Inc. (WMT) presented today at the Goldman Sachs retail conference. This was one of the new CEO Mike Duke’s first presentations since taking the top position at the world’s largest retailer.

[H]e said that Wal-Mart is not just the low-end customer, but all customers. There is a new sense of frugality. He noted that the value for items that last is replacing the throw-away society. Customers are also buying less “in advance” and defer purchases until they are needed. There is also a huge spending gap around paycheck dates. Duke called this the new normal.

In the retail environment, it is no secret that the calendar Q4 (fiscal quarter November to January for retailers) is so important to all retailers. Duke...expects a late Christmas because of customers waiting until closer to the need-date and because of the desire to find values.

http://247wallst.com/2009/09/10/wal-mar ... stmas-wmt/

[winston]

Stats of the week: 200 million

Number of customers Wal-Mart – the world's largest retailer – has globally per week, according to CEO Mike Duke.

Source: Daily Wealth

[winston]

Why you must own this "World Dominator"
By Dan Ferris in the S&A Digest:

When Wall Street research is good, you have to point it out because it's such a rare phenomenon. Rochdale Securities (located in Connecticut, a suburb of Wall Street) says Wal-Mart is its "highest conviction" idea. It says defensive retail stocks, like Wal-Mart, are especially attractive should the recovery prove volatile and economically sensitive stocks like mining and financials fall.

As longtime readers of Extreme Value know, Wal-Mart is an incredible business, one of the greatest ever. These days, it's in a sweet spot of its life cycle. It's a large, mature business whose competitive advantage keeps cash coming in. At the same time, lower capital expenditures and higher dividends and share repurchases are a rational expectation.

Wal-Mart defended investors' capital well in 2008, as it was one of only two Dow stocks to rise last year, and the only one to produce a double-digit total return (+18%).

You might be feeling bullish now, but I promise you, with stocks trading at 26 times earnings and yielding 2%, you aren't likely to feel that way for long. World Dominating franchises like Wal-Mart are one of the few ways most investors will make any money if they're buying stocks today.

[winston]

Why You Should Cheer the Most Hated Company in America
By Dan Ferris, editor, Extreme Value

One of my favorite stocks in the world – Extreme Value recommendation Wal-Mart (WMT) – reported earnings this week.

Unlike most of the earnings reports you hear in the retail world, this one was genuinely good. Wal-Mart's net earnings rose 3.2%. The company says it expects sales for the current quarter – including the holiday season – to be flat or down 1%.

CEO Mike Duke reported Wal-Mart is gaining market share "all over the world" as the economic crisis makes it harder to make ends meet... and a better idea to shop at Wal-Mart.

Wal-Mart is firing on all cylinders these days, and not only because it's the best place to get low prices on everything from groceries to guns to gold jewelry. Wal-Mart is also serving those with little or no access to banking. This is classic Wal-Mart. Wal-Mart has always been good at serving customers other retailers shun (notably rural communities).

Back in 2007, the banking establishment prevailed in pressuring the government to block Wal-Mart from starting its own bank. So Wal-Mart decided to build its financial services in other ways.

One of its most popular financial products is prepaid debit cards. Considering the enormous overdraft fees charged by banks, paying $2 a pop for a prepaid card is a bargain. Wal-Mart cut the fee from $3 to $2 back in February, a perfect moment when the country's banks were wallowing in the disgrace of bailouts and scandals.

As of last February, Wal-Mart had sold more than 2 million prepaid cards, accounting for more than $2 billion worth of transactions. Wal-Mart also offers money-transfer, check-cashing, and bill-payment services at more than 3,500 U.S. stores.

In a few more years, Wal-Mart will be right in the big banks' faces, doing what they've been trying to do (or at least talked about doing) for years – serving the unbanked and underbanked customer, a vast sea of individuals with too little money to participate in the traditional banking system.

The big banks have failed miserably only because they can't figure out how to collect enormous fees from a customer who has little money. Banks only want customers they can keep captive with checking accounts, credit cards, and other products that allow them to charge you fees you don't even know you're paying.

How have the big banks responded to the poor economy? They've raised interest rates and fees on credit cards. I canceled a Chase business card, which I've paid faithfully, because the bank raised my interest rate to 29%. If they're charging me 29%, what are they doing with the customers who don't pay on time? 129%?!

Wal-Mart isn't like that. As Lloyd Constantine, a class-action lawyer who represented Wal-Mart in its case against Visa and MasterCard, put it: "Wal-Mart's instincts are just the opposite [of the banks'] – lower prices, lower excess, streamline, simplify."

Constantine told American Banker, "That approach to banking is absolutely necessary and desired in the United States, and the fact that they were blocked from doing that is an absolute tragedy." Lloyd said if Wal-Mart had been granted a bank charter in 2007, it "would have served the American public well."

So especially these days, whom is the low-income, underbanked customer going to trust? A bailed out "too big to fail" bank or Wal-Mart, the company that offers customers the lowest-cost option for groceries and other basic items? I vote for Wal-Mart and against the government and its banker pals.

I said it three years ago when I wrote The War Against Poor People, my initial Wal-Mart recommendation. And I'll say it again today: Wal-Mart is a revolution. It was a discount-store revolution. It's a jewelry-store revolution. It became a grocery-store revolution. Now, it's a financial-services revolution, at possibly the most perfect moment in history for such a revolution to happen.

It is a perfect irony the government and the banks refused to grant Wal-Mart a banking charter back in 2007. Now, both the government and the banks are more and more discredited every day, and Wal-Mart continues helping everyone save money.

No organization is perfect... and Wal-Mart still has its critics. But compared to the liars and thieves that staff the highest levels of our banking system and the government, it's obvious Wal-Mart is one of the best friends the average American could possibly ask for.

Source: Daily Wealth

[winston]

If Walmart has to close 10 warehouse stores, things are not that hot on the ground, isnt it ?

Wal-Mart to close 10 Sam's Clubs stores in US

Wal-Mart said Monday it will close 10 money-losing Sam's Club stores and cut 1,500 jobs to reduce costs.

The stores will close Jan. 22. They are in Nampa, Idaho; La Quinta, Calif.; Louisville, Colo.; Vista, Calif.; Rolling Meadows, Ill.; Clay, N.Y.; and Irvine, Calif. The cities of Houston, Phoenix and Sacramento, Calif., will each lose one store.

"Despite the outstanding efforts of our associates, these clubs continued to lose money and we have decided to close them," Sam's Club CEO Brian Cornell said in a statement.

Cornell said the company is trying to find jobs at other Sam's Club or Wal-Mart locations for workers who lost their jobs. Wal-Mart owns the Sam's Club warehouse stores chain.

Wal-Mart Stores Inc., based in Bentonville, Ark., says it plans to disclose the financial details of the closures when it announces its fourth-quarter results on Feb. 18. It does not anticipate any material adverse impact on fourth-quarter profit.

Source: AP News

[millionairemind]

The situation doesn't look too hot on the ground...

Jan 25, 2010
Wal-Mart axes 11,200 staffers
NEW YORK - WAL-MART Stores Inc will cut about 11,200 jobs at Sam's Club warehouses as it turns over the task of in-store product demonstrations to an outside marketing company.

The move is an effort to improve sales at Sam's Club, which has underperformed the company's namesake stores in the US and abroad.

The cuts represent about 10 per cent of the warehouse club operator's 110,000 staffers across its 600 stores. That includes 10,000 workers, mostly part-timers, who offer food samples and showcase products to customers. The company also eliminated 1,200 workers who recruit new members.

Employees were told the news at mandatory meetings on Sunday morning.

'In the club channel, demo sampling events are a very important part of the experience,' said Sam's Club Chief Executive Brian Cornell in a phone interview. 'Shopper Events specialises in this area and they can take our sampling programme to the next level.'

Shopper Events, based in Rogers, Arkansas, currently works with Wal-Mart's namesake stores on in-store demonstrations. Sam's Club is looking to the company to improve sampling in areas such as electronics, personal wellness products and food items to entice shoppers to spend more. -- AP

[winston]

Not vested.

Wal-Mart's sales last quarter rose 4.2%... but sales at stores open more than a year (called comp sales, a key retail metric) fell 2%. Naturally, the Wall Street Journal headline said, "Wal-Mart's Profit Rises 22%," while the Financial Times noted correctly, "Walmart suffers first US sales decline."

Those who fear inflation can't ignore what's going on at a monster like Wal-Mart, the world's largest retailer. The world's largest grocer said the drop was caused by deflation in the price of groceries – which make up 40% of its U.S. sales – and in the price of electronics. Wal-Mart is known to eschew temporary, promotional pricing in favor of its trademark "everyday low prices." Seems like every day last quarter they got lower and lower.

Wal-Mart also said its ongoing remodeling of U.S. stores hurt foot traffic more than anticipated. That's Wall Street speak for fewer people shopped at Wal-Mart last quarter.

Perhaps Wal-Mart isn't the best bellwether for inflation... For the 12-month period ended January 2010, the unadjusted producer price index of wholesale goods in the U.S. rose 4.6%. That's the largest 12-month increase since October 2008.

Of course, the news stories all say that, when you strip out increases in food and energy, it's really not that bad. These folks should try stripping food and energy out of their lives. I bet that would be pretty bad.


Source: S&A Digest

[winston]

How Wal-Mart stands to enjoy tremendous sales growth By Dan Ferris in Extreme Value:

I've pointed out several times that Wal-Mart's international business is a great growth story for such a large business. Last year, it proved that again, with international net sales up 11.9% on a constant currency basis. International operating income was up 12.8% last year on a constant currency basis. Wal-Mart's international-division sales exceeded $100 billion for the first time ever last year.

If you think hundreds of billions in sales means Wal-Mart's growth days are over, think again. In 1997, Wal-Mart's total sales were just under $100 billion. Sales exceeded $400 billion in the fiscal year ended January 31, 2009. That's 12 short years to quadruple sales. A similar performance from the International division would add $300 billion in sales by 2023.

I bet the countries Wal-Mart is operating in internationally are growing faster than the U.S. grew the last 12 years, so maybe it's not so unrealistic to expect Wal-Mart to grow in these markets the way it did in the U.S. from 1997 to 2009. Could you imagine a $1 trillion Wal-Mart during our lifetime? It's not totally out of the question. The bigger Wal-Mart gets, the greater its competitive advantage, and the greater its ability to leverage its expenses and pass on greater savings to customers.

I believe there's plenty of growth left in Wal-Mart. I also think Wal-Mart will keep buying back shares over time and raising its dividend annually.

…Ten years from now, after all the trend chasers have stopped you out of a hundred losing positions, you'll be glad you were smart enough to put 5% of your account in Wal-Mart and just leave it alone.