Hard times are proving to be good times for Wal-Mart Stores. The retailer posted its first-quarter earnings on Tuesday and it was all good: a 10% increase in net sales and an uptick in profits of nearly 7% to $3.02 billion (vs. the first quarter of last year). CEO Lee Scott, who said the year was off “to a solid start” evoked the memory of company founder Sam Walton boasting that Wal-Mart’s business model is “even more relevant to our customers today” than when Walton created it.
Clearly the anxiety — and for some real pain — caused by rising fuel and food prices is driving many consumers through Wal-Mart’s doors, including some who in flusher economic times might have turned up their collective noses at shopping at a soulless Wal-Mart supercenter. Among them there may be some Target shoppers. Wal-Mart’s arch rival, whose stock and sales growth had been outperforming its larger rival’s until last year, has not fared as well. First quarter sales at the #2-discount chain rose 5%, while same-store sales were down nearly 1%. Wall Street has bid Wal-Mart’s shares up about 22% over the last six months, while Target’s share price has dropped by 6%.
The timing of the economic downturn has been stellar for Wal-Mart, which has been working hard to improve both its corporate image and in-store experience. Amenities, such as better lighting and hardwood floors, and more importantly better merchandise (more organic and fresh foods and nicer apparel) may impress newcomers, while Wal-Mart’s core lower-income customers will continue to shop its stores for deeply discounted grocery and pharmacy items. In short, Wal-Mart is presented with a golden opportunity to connect with a broader segment of consumers. It’s also well positioned to capitalize on the flood of rebate dollars flowing into the economy in the second quarter. To entice shoppers, the retailer is offering to cash economic stimulus check for free (no purchase required). Of course, there are plenty of incentives to spend your rebate in its stores.
To grab consumers’ attention the company’s latest ad slogan poses the question: “What will you do with your savings?” The “Save money. Live better,” campaign, which I blogged about last year, pitches saving as a virtue — rather than an unattractive chore — and invites us to think of the possibilities. It’s an optimistic message for these depressing times.
Comments
Jimmy James Says:
May 16th, 2008 at 3:01 pm
Saving is a virtue– no argument there.
But I’m not convinced it’s a net positive for Americans, economically, to shop at Wal-Mart. We’re talking about a company that strong-arms its suppliers into mass-producing shoddy products in hadardous conditions in near-slave economies– economies such as China, which are buying up American currency as our job sector evaporates and our economy gasps for air.
I’m working with Wake-Up Wal-Mart to raise awareness of the retail giant’s effect on the American economy. Don’t get me wrong: I agree that it’s a wonderful thing for any American company, even Wal-Mart, to find a way to succeed where others struggle. But when we’re talking about the largest retailer, and the largest employer, in America, we should be also be talking about an entity that lives up to its “good corporate citizen” talking points. We need to hold Wal-Mart to a higher standard, if it wants our business during these depressing times.
Mike Edwards Says:
May 16th, 2008 at 8:28 pm
Amen… Jimmy hit the “nail on the head”.
I love the Chinese and their culture, however, they now own much of our debt… they take most of our labor… and work with United States big business and a number of our politians to rape their lower class and the U.S. middle class. Thank you, Mr. President.
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