The biggest oil company in the world and the biggest retailer in the world are loving life as the economy sinks.
Wal-Mart stock has risen 20% since the start of the fiscal year. Exxon Mobile just posted the largest quarterly earnings in American history- to the tune of 14.83 billion dollars. The recession has done wonders for both companies; the volatile price of oil, puts Exxon Mobile in the position to capitalize on futures from supply-wary market analysts, while Wal-Mart continues to post double-digit profits because of the high number of price-conscious consumers who are forced to trade down - even if it’s against their will.
Many more-upscale retailers, such as Target, are not doing quite as well during the recession. BusinessWeek reports that looking at the most recent quarter over the past year, Wal-Mart’s same store sales are up 5% while Target’s are down 0.4% and K-Mart’s are down 5.6%.
But these days are numbered. Wal-Mart knows that the recession won’t last forever. This week, they unveiled plans to focus more on renovating existing stores next year than opening new stores. Wal-Mart realizes that when the economy turns up again, many of its new customers will want to shop elsewhere - and they’re trying to stop it. The question is: will it work?
Wal-Mart Wins Big During Downturn [BusinessWeek]
These are heady times for Wal-Mart (WMT). The Bentonville (Ark.) retailer has been enjoying double-digit profit growth and strong sales as bargain hunters crowd its aisles. Its stock is up about 20% since the start of the year. And shoppers like Sal Garcia of Downey, Calif., are joining the growing ranks of loyal customers. “Look,” says Garcia, 52, putting the last of 10 shopping bags into the trunk of his Lexus, “all that for $54!”
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Posted by Luke West | Permalink
Lee Scott and Eduardo Castro-Wright have spent the past two days in New York City, detailing Wal-Mart’s business plan to financial analysts. There’s a lot to run down here, but the big (and good) news: less new Wal-Marts. The company is continuing to cut down on capital expenditures and build less stores, focusing instead on remodeling and driving up sales at its current stores.
As a result, capital expenditures will come in at $5.8 billion to $6.4 billion for fiscal 2009 and $6.3 billion to $6.8 billion in fiscal 2010. That’s down from the $9.1 billion the company had in capital expenditures in its last fiscal year.
The Wall Street Journal tells us what that means in terms of store numbers.
Mr. Castro-Wright also said the discount retailer plans to open 142 to 157 new U.S. stores in the fiscal year ending January 2010, down from an earlier projection of 165.
150 stores is still a heck of a lot, but any decrease is a good thing. Remember that growth in 2008 had dropped from 2007, and that only several years ago Wal-Mart was opening 300+ new stores a year.
Some other tidbits from the analyst meeting below the jump-
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Posted by Eric Bull | Permalink
A story out today from Advertising Age has an in-depth break down of Wal-Mart’s current business and marketing strategy. Most retailers are scrambling to stay afloat as the economy declines, but in the last month Wal-Mart has seen rises in both its stock price and profits.
Shoppers are trading down, and Wal-Mart is as low as they can go. A bad economy has always been good for Wal-Mart, and today’s recession-like atmosphere is no different. Wal-Mart’s execs claim the recent boost in sales is due to a “strategic three-year plan,” but most analysts agree: when the going gets tough, the tough go to Wal-Mart.
“But,” says one analyst quoted in the article, “there is a chink in the armor of Wal-Mart, which is these customers are not saying they necessarily feel loyalty.” Though more people are shopping at the low-price retailer, they’re not likely to stay. Wal-Mart’s only advantage is its prices: customer service, product quality and company ethics are all secondary objectives, and shoppers know that. Brand loyalty might not be a problem for Wal-Mart now, but once the economy improves the company could face the consequences for putting low prices above all else.
Wal-Mart Grinning Big Through the Tough Times [Advertising Age]
Looking for a silver lining in the economy? It’s shining brightly from Bentonville, Ark.
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Posted by Alex Goldschmidt | Permalink
WAL-MART EARNS BUCKETS OF MONEY
In case you weren’t aware.
Winners and Losers [Floyd Norris on the New York Times]
As the stock market goes back to gyrating –the Dow has been up more than 100 points, and down more than 200, during the first two hours — here, courtesy of Howard Silverblatt of Standard & Poor’s, are the Lucky 13 and the Unlucky 13 for this year.
Lucky 13:
1. WAL-MART +$52.1 billion
MAN IT FEELS GOOD TO BE A WALTON
The Walton family is worth over $100 billion. Discuss.
The Waltons: SUPER DUPER RICH!!! [WakeUpWalMart.com Blog]
Of course there is nothing wrong with this family being so absurdly wealthy. No, our objection is that they make their profits on the backs of their workers by mistreating them and paying them poverty level wages. Contrasting a typical Wal-Mart workers wage with the Walton families wealth is mind boggling, and more than a little depressing. For example, it would take someone making $20,000 a year (which is a relatively high wage for your typical Wal-Mart cashier) on million years to net the amount of money one Walton sibling is worth.
If I Were A Rich Man… {Smart Profits Blog]
Warren Buffett with 50 billion takes second while Lawrence Ellison comes in at third with significantly less: a mere 27. Then fourth, fifth, sixth and… sixth… are all Waltons, somehow or another tied to WalMart founder Sam Walton. Jim Walton possesses a cool 23.4 billion, his brother S. Robson Walton has slightly less at 23.3, while their sister Alice Walton and sister-in-law Christy Walton tie at 23.2.
Walton Family Dots 10 Richest Americans List [Family Store Online]
Jim Walton, son of Wal-Mart Stores Inc. founder Sam Walton, reclaimed a leading spot this year at No. 4 with a $23.4 billion fortune after falling off last year. ... Eldest brother Robson Walton, 64, comes in a close second with $23.3 billion, landing him in the No. 5 spot. He is chairman of Wal-Mart. WHAT’S IN **YOUR** WALLET?
Forbes 400 richest out [Writing on the Wal]
The Walton’s, still the friends of downtrodden shoppers everywhere…
Forbes 400: List of the Richest Americans [Young, Famous and Fashionable]
The Walton family are all stinkin rich, controlling abt 40% of the worlds largest retailer,
illegal child labor marti meanworkers can’t unionize martwoops.. i mean Walmart, with abt $23B each.
After the jump, shopping for groceries, reasons not to shop at Walmart, and sure signs the economy is REALLY bad.
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Posted by Alex Goldschmidt | Permalink
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