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Or it could just be coincidence. But, to quote Elim Garak from Deep Space Nine, “I believe in coinicdence, but I don’t trust it.” And no, I’m not a Trekky. I only catch re-runs of DS9 on Spike TV.
Isn’t it interesting how earnings and revenue expectations become quantified. And then reality comes in, with actual results. And the actuals are compared to quantified predictions to decide if there is a problem, and what the problem is, if there is one.
Wonderful profit – forecast – actual feedback. VERY sustainable. Based on freely made voluntary contracts, and people honestly fulfilling their commitments.
Almost completely unlike any and all government run programs.
And it’s wonderful that both the likely problems: dirty crowded stores, too cheap/ low end selection in an expanding economy have already been identified as possible problems. AND a likely reason for “no problem” (no change), if the gifts turn out to come thru and give WM big profits for 4Q after all.
The analysis in the press this morning was simply that WalMart had not offered the same pre-holiday discounts as in the past, in an attempt to bump up profits on holiday shopping on the assumption that people would buy just as much at the “everyday low prices”, and it backfired.
Retail analyst Kurt Barnard noted that Wal-Mart’s downward sales forecast did not necessarily indicate the company will make less money. . . .
Barnard and other analysts said Wal-Mart didn’t offer the deep discounts it did in past years as the holiday shopping season kicked off on Friday.
“I think that Wal-Mart simply decided its normal range of pricing is such that it is definitely considered low by any normal standard,” Barnard said.
By sitting out a year of doorbuster promotions, Wal-Mart may well have been trying to see if it can keep its profits up without having to slash prices on already discounted merchandise, Barnard said.
“They’re looking to get a better gross margin,” he said. “They undoubtedly achieved that.”
Of course, that could still support an insider-trading stock buy-back scenario, but it doesn’t mean that the company is hurting financially.
But . . . other retailers are reporting solid sales, on the high end of expectations.
Here’s my theory: people will do a lot of Christmas shopping in higher-end stores if they can afford to do so. If Wal Mart forecasts are flat, but the Dillards and the McRae’s and the Saks are having a great year, that says more about the economy than just Wal Mart’s piece of the pie. If Dollar General were having a blowout year, I suspect that is a negative indicator for the economy as a whole. Maybe that’s true of WM also.
Another Wal-Mart Theory
Joe Carter thinks Wal-Mart’s bad news isn’t really bad. The secret: gift cards. “The Retailer
I actually heard a similar analysis on NPR yesterday (sorry, no citation/link) and one of their analysts added that 25% of WalMart shoppers have no bank account (!) which explains the boon from the gift cards.
Regardless, I’d just as soon shop at a retailer like Costco.
I am leaning toward folks looking to diversify their shopping experiencing by heading to higher-quality, less-stress retailers. I like Wal-Mart if I need a bunch of household stuff and a couple of groceries. I just don’t, however, view Wal-Mart as a place to look for quality gifts for people. Most folks have a bit more money this Christmas and are willing to head to better stores. Turning something over and seeing a “Made in China” logo (as is on most WalMart stuff) is not quite the same as turning it over and seeing “Made in the USA” or some other country.
Do you mean to imply that Wal-Mart, having achieved near-monopoly status in many US markets, is now charging higher prices? I can’t tell you how this shocks me…
Perhaps people are realizing that Wal-Mart is not the cheapest place in town. I noticed that their “specials” are usually great buys, but the runnier up products which have some of the basic extra’s are usually priced higher than competing stores. I have stopped shopping at Wal-Mart since I have discovered I can buy almost anything they have cheaper somewhere else. Perhaps supporting the competition will preserve free enterprise and avoid the day when the “state” store is Wal-Mart and we have no choice. Wal-Mart has run many smaller stores out of business and I miss them!
Perhaps people are realizing that Wal-Mart is not the cheapest place in town. I noticed that their “specials” are usually great buys, but the runner up products which have some of the basic extra’s are usually priced higher than competing stores. I have stopped shopping at Wal-Mart since I have discovered I can buy almost anything they have cheaper somewhere else. Perhaps supporting the competition will preserve free enterprise and avoid the day when the “state” store is Wal-Mart and we have no choice. Wal-Mart has run many smaller stores out of business and I miss them!
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