The Financial Timesreports on Wal-Mart's (NYSE: WMT) new Marketside store format, which the company describes as a "small community grocery store" (15,000 square feet). Wal-Mart is testing the format out in Arizona but has speculated that, if successful, the chain could grow to 1,500 stores with $10 billion in annual sales.
A look at the Marketside website is illustrative of what Wal-Mart's trying to do here: scanning around on the site, I can find exactly one reference to Wal-Mart, and even that one appears to be qualified: "Marketside is a small community grocery store owned by Wal-Mart Stores, Inc." In disclosing the ownership, Wal-Mart distances itself from its offspring.
Wal-Mart's purchasing power will give the new stores the same competitive advantage it has with its big box locations: lower prices. It remains to be seen whether the small size/lower sales will give Wal-Mart the scale it needs to earn out-sized profits. You have to think there's a reason Wal-Mart's been slow to test out smaller scale formats, opting instead to move into the uber-big box category with its Supercenter locations. This new format may be indicative of the company's pessimism about long-term domestic growth prospects with its bread and butter, and this diversification may be a sign of weakness rather than strength.
Wal-Mart's talent lies in logistics, not in building a great local grocery brand. I'll go out on a limb and predict that we won't hear too much more about Marketside after the initial push. I certainly wouldn't hold my breath waiting for one to open in a town nearby.
Welcome to the 73rd installment of The Wal-Mart Weekly, a column dedicated to bringing you insight, wit, facts, results, opinions, and just a bit of everything else when it comes to a very hot topic these days: Wal-Mart.
This week, I'll be taking a look at whether Wal-Mart Stores Inc.'s (NYSE: WMT) earlier decision to bring its store managers together and tell them about the possible repercussions of a Democratic president violated federal election laws. Since presumptive Democratic Presidential candidate Barack Obama has now chosen veteran politician Joe Biden as his running mate, is Wal-Mart chewing its corporate fingernails off?
The Democratic National Convention begins today, so it will be interesting to see what comes out of it. Did Wal-Mart violate federal campaign election laws by having an "education session" with the leaders (and in turn, employees) of its national store locations? Let's see what national labor unions think. Read on.
Wal-Mart Stores (NYSE: WMT) is the world's largest retailer, offering a vast array of general merchandise through some 7,350 stores. That total includes nearly 1,000 discount stores, over 2,800 combination discount and grocery stores and about 600 warehouse outlets. More than half of Wal-Mart's stores are in the United States, but the firm has a widespread and growing international presence. It is the biggest retailer in Canada and Mexico, has a 95% stake in Japan's Seiyu and has developing operations in Europe, South America and Asia. The company employs more than two million associates and serves more than 200 million customers per year. Target (NYSE: TGT) and Costco Wholesale (NASDAQ: COST) are major competitors.
The stock has been a steady gainer of late, advancing on word of better than expected Q2 results, solid expectations for Q3/FY09, decent same-store sales figures, international development, and generally favorable analyst commentary.
The stock market was down yesterday and it is down again today. Bearish sentiment is roaming through Wall Street right now, so I thought I would look back on another occasion when the market was going through similar turmoil and I wrote about the following eight stocks, which I thought would be "safe havens" in such a storm.
Six of the eight did well and two did not, and of course one of those two was a disaster. Among the losers, I do not think anyone is fretting about UPS, which is still one of the few triple-A rated companies along with Berkshire Hathaway. It has been well reported that the slowing economy and higher fuel prices have been the major culprits affecting UPS's earnings. In the case of WaMu, it's demise has also been well reported, but at the time I recommended it WaMu had a stellar reputation of growth and high yield for over two decades. There is no hiding, it turned out to be a lousy pick and an ANTI-SAFE Haven
Washington Mutual(NYSE: WM) closed Monday at $4.21 down from $45.50; a 98% loss.
Fortunately the remaining six picks have done very, very well. If you had bought the pool, the average gain over the last two years would have been 7.14%. Adding the dividends over the two years would have raised this to 13.14%.
Welcome to the 72nd installment of The Wal-Mart Weekly, a column dedicated to bringing you insight, wit, facts, results, opinions, and just a bit of everything else when it comes to a very hot topic these days: Wal-Mart.
Ever since the 1990s, Wal-Mart has been a powerful force in American retailing as the Supercenter concept starting taking root in metro areas throughout the U.S. As the retailer became the dominant discounter, it brushed aside the competition just dirt under a rug.
Of course, along with powerful growth comes powerful opposition. I like to draw comparisons to Microsoft Corporation (NASDAQ: MSFT), when it comes to Wal-Mart. Microsoft has its operating system that has standardized a complete personal computer industry under one umbrella and became the de-facto standard that, more than anything, revolutionized the computer industry. For Wal-Mart, its relentless pursuit of finding lower prices and passing those savings on to the consumer made it become the largest retailer in the world.
AC/DC made its name as one of the pioneers of hard rock and heavy metal, but the band's latest gig has a decidedly corporate ring to it: the band's new album, Black Ice, will be available exclusively (subscription required) at Wal-Mart (NYSE:WMT)
It's the band's first album of new material in eight years, and will be debut on October 20th at the "everyday low price" of $11.88. AC/DC's music has never been available on iTunes.
Classic rock bands including The Eagles and Journey have made albums to be sold exclusively at Wal-Mart and, while it doesn't exactly have iTunes quaking it in its boots, it is one gimmick that's keeping CD's relevant for at least a little while longer.
Artistically, it's more than a little bit pathetic to see bands that used to be so cutting-edge hocking their wares through an exclusive arrangement with the world's largest retailer.
It's a good thing The Beatles broke up so its rabid fans wouldn't have to endure stuff like this.
Kohl's Corporation (NYSE: KSS) is up over 7% as I write this. Wall Street is apparently infatuated by the company's Q2 numbers, issued on Thursday after the bell. On the surface, however, one might question why there's such an interest. After all, the top line increased only 4% and the bottom line actually decreased 7% to $0.77 per diluted share. And, more dishearteningly, same-store sales, a vital metric for retailers, fell well over 4%. In fact, for the six-month period, same-store sales declined well over 5%.
Here's what Wall Street seems to be thinking. The gross margin expanded from 38.9% to 39.6% in the quarter. In the six-month timeframe, the gross margin expanded from 37.9% to 38.2%. Also, management increased its earnings outlook for the fiscal year from a range of $2.95 to $3.15 per share to $3.02 to $3.18 per share. This guidance assumes declines in comps of between 2% and 4% for each of the next two quarters. Kohl's beat estimates by $0.04, according to Briefing.com. And cash from operations more than doubled over the last six months to roughly $874 million.
All of that is pretty impressive, so I guess I can understand the buying of the stock to some degree. I do see some things to be concerned about, though. While gross margins went up, operating margins went down. Plus, I don't like the declining comps in this case. And I have to wonder how the economy will treat Kohl's in the coming holiday season. I definitely wouldn't be in a rush to chase this stock, especially after the run-up today. As I've said in other pieces on retail investing, Wal-Mart Stores, Inc. (NYSE: WMT) and Target Corporation (NYSE: TGT) are businesses I'd look at first in this sector. However, one thing I do have to concede is that the stock has been very strong lately, so there may be a case to be made for capturing some momentum here. Still, if I'm going for momentum, I might go with retail businesses that have stronger brand equities (in my opinion, at least).
Disclosure: I don't own any company mentioned; positions can change at any time.
Earlier this month, the Wall Street Journal reported that the world's largest retailer had warned employees that a Democratic president would back the Employee Free Choice Act, a law that would make it easier for unions to organize workers, which the company opposes. The paper now is saying that the union groups have asked the Federal Election Commission to investigate the matter, which they claim violates federal law.
Of course, this is a brilliant public relations move by the unions. First of all, the FEC is as toothless as some Wal-Mart greeters. Even if the FEC finds that Wal-Mart broke the law, the worst that the company will get is a slap -- make that a tickle -- on the wrist. That may not even happen until well into an Obama administration, which brings up my next point.
Why is Wal-Mart set to pick a fight with the Democrats? Don't the folks in Bentonville read the political tea leaves? Odds are pretty good that the country will go Blue in a big way. Maybe the company is worried that the good times reflected in today's results won't last.
Americans drove 12.2 billion miles less in June than they did a year ago, according to the Federal Highway Administration.The number is too big to fathom. It is probably like driving to the Moon and back 876 times, or some other absurd analogy.
What is certain is that the trend puts a downward pressure on gas prices and could be a factor in per gallon costs going back toward $3. For any company in a business that relies on drivers, though, the driving less trend is bad news.
Hotel and motel company stocks are likely to get hit fairly hard because drivers are staying off the road. It probably does not help fast food places like McDonald's (NYSE: MCD) either. Retailers, including Wal-Mart (NYSE: WMT), are certain to be hurt, but online shopping at retail websites may soften that blow.
Of course, car companies get hammered. People who don't drive don't need new cars. Operators of oil change outlets will probably have a bad year. The same holds true for tire companies.
Put another way, the economy might be better served if drivers would get back in their cars.
Douglas A. McIntyre is an editor at 247wallst.com.
With its results benefiting from high gas prices and a renewed consumer focus on bargains, Wal-Mart (NYSE: WMT) is looking more relevant than it has in years. The company is also redoubling its efforts to make inroads overseas.
Craig Herkert, president and CEO of Wal-Mart's America's division, met with Brazilian President Luiz Inacio Lula da Silva, and the company released a statement saying that it would seek to open 80 to 90 new stores and that "The retailer will make its largest investment yet in the country since it started operating in Brazil fourteen years ago."
This seems like a prudent investment in a region where Wal-Mart has enjoyed considerable success. Eight of the 12 foreign countries Wal-Mart has operations in are in Latin America, and the company's concept appears to work there. In other foreign markets, most notably Germany, Wal-Mart's fixation on low prices has met with failure. The developing world likely represents Wal-Mart's best opportunity for long-term growth.
Wal-Mart Stores, Inc. (NYSE: WMT) blasted past quarterly expectations this morning when it reported 87 cents profit per share before the market opened this morning. The consensus had been $0.83 per share with $101.6 billion in revenue. Final figures came in at $102.67 in revenue for the retailer's second quarter -- almost $10 billion over the year-ago quarterly figure of $93 billion.
It's another example of how many Americans are hiding out at Wal-Mart day after day looking for cheaper prices on just about everything they buy. But that's not all -- international sales skyrocketed as well, seeing a 17% lift over the year-ago quarter compared to an 8.5% lift in the U.S. In addition, international profit spiked to 16.5% as well.
So, add up Wal-Mart's tagline Save Money. Live Better, the federal tax stimulus checks and the rising gas and food prices and there you have it -- Wal-Mart benefits from all. Although gas prices have trended downward in recent weeks, fuel is still expensive.
With Wal-Mart's failed attempt to lure more higher-spending (on higher-margin goods) customers, the company is falling back on its strength: low prices. The timing has been perfect for the retailer. But one has to ask: is fuel and commodity prices ever go back down to 2006 levels (yeah, right!), will customers return to their pseudo-affluent lifestyles and move out of Wal-Mart?
Stock futures were higher Thursday morning, as bulls tried to answer to two bear days. Wal-Mart reported this morning, beating estimates and boosting guidance as well as Street sentiment. Still, coming ahead is inflation data at 8:30 a.m. Economists expect CPI to rise 0.4% in July, and could very well impact markets. Meanwhile, oil prices rose and the EU reported that euro-zone economy contracted 0.2% in the second quarter.
Wal-Mart Stores Inc. (NYSE: WMT), the world's largest retailer,reported a second-quarter earnings growth of 17% to of $3.4 billion, or 87 cents a share, beating analyst estimates of profit of 84 cents a share. Revenue rose 10% to $101.6 billion, slightly below estimates. The company also boosted its full-year earnings forecast. The company benefited from the challenging economic conditions as shoppers looked for lower prices. Its cost cutting measures also helped. WMT shares are gaining nearly 1.5% in premarket trading.
As Apple Inc. (NASDAQ: AAPL) shares rose in recent years, many have tracked its progress as it surpassed one major company after another in market capitalization. Well, All Things Digital noticed that Apple can put another check mark, this time as it passed Google Inc. (NASDAQ: GOOG). Yes, Apple is now larger than Google.
Macy's (NYSE: M) didn't do too well in its second-quarter according to the earnings report, but it did beat profit expectations. Net revenues saw a decline of 3%, coming in at $5.7 billion. Adjusted net income from continuing operations was $0.29 per diluted share. According to this article, the call from the wizards of Wall Street was for $0.19 per share.
That's quite a beat, I'll grant you, but there are some caution signs investors must read regarding Macy's. As the article mentioned, the outlook isn't that great, and the retailer doesn't expect much from same-store sales as it goes into the autumn. In fact, sales should either be flat or will decline slightly. Same-store sales represent an important metric for retail chains, and if that metric can't be delivered, then investors need to take notice. For the quarter, comps were down a little over 2%. Over the last six months, comps were down by roughly the same amount.
Net cash provided by operating activities actually went up 44% to $592 million. The gross margin also improved. Cool stuff, perhaps, but they still don't change my bearish inclination toward the company. Macy's is still trying to turn itself around and become a player in retail, but it will be tough considering the economic challenges that the entire industry is currently facing. It's not going to be a strong holiday season for the company, and in terms of investment ideas, I'd still look at Wal-Mart (NYSE: WMT) or Target (NYSE: TGT) in the retail sector. I don't see any reason to put money to work in Macy's (some do, though, since the stock is up almost 2% as I write this, and it has done very well over the last month, according to the AOL Finance snapshot).
Disclosure: I don't own any company mentioned; positions can change at any time.
Wal-Mart Stores Inc. (NYSE: WMT), the retailer that keeps on chugging along nicely in the U.S. economic downturn, is set to release its Q2 numbers Thursday. Expectations are for a profit of 83 cents per share on sales of $101.6 billion, an increase from the year-ago quarter earnings of 76 cents per share and sales of $93 billion.
As I've been saying since 2006, Wal-Mart's effort to draw more affluent and middle-class customers through its doors was no match for its continued message of low prices. Customers, now more than ever, are lining up all day (and night) at the local Wal-Mart to buy everything from cheaper gas to low-priced milk, bread, processed foods and flat-panel televisions.
When U.S. sales chief Eduardo Castro-Wright announced that the retailer was going to partially abandon its Always Low Prices moniker and go after shoppers who purchase higher margin goods, I had a feeling that Wal-Mart's entire history of competing only on price would win the day, regardless of the strategy change. Then the housing crisis hit, gas prices went nuts, the auto industry saw a huge sales downturn -- particularly in large trucks and SUVs -- and 'staycation' became part of the language.
Wal-Mart changed its tune last year and now sports a new logo and tagline that reads Save Money. Live Better -- and that's pretty direct in its meaning. Wal-Mart is helping the average American family save money on all purchases so it can spend the savings elsewhere, like gas and school supplies. Is Wal-Mart your friend? That's the image it wants to present, and when it releases its Q2 numbers, it should easily meet financial expectations as it goes for half a trillion in annual sales in the next few years.
The Financial Times reports on Wal-Mart's (NYSE: WMT) new Marketside store format, which the company describes as a "small community grocery store" (15,000 square feet). Wal-Mart is testing the format out in Arizona but has speculated that, if successful, the chain could grow to 1,500 stores with $10 billion in annual sales.
Welcome to the 73rd installment of The Wal-Mart Weekly, a column dedicated to bringing you insight, wit, facts, results, opinions, and just a bit of everything else when it comes to a very hot topic these days: Wal-Mart.
The stock market was down yesterday and it is down again today. Bearish sentiment is roaming through Wall Street right now, so I thought I would look back on another occasion when the market was going through similar turmoil and I wrote about the following eight stocks, which I thought would be "safe havens" in such a storm.
AC/DC made its name as one of the pioneers of hard rock and heavy metal, but the band's latest gig has a decidedly corporate ring to it: the band's new album, Black Ice, will be available 
The cold war between 
With its 
Stock futures were higher Thursday morning, as bulls tried to answer to two bear days. Wal-Mart reported this morning, beating estimates and boosting guidance as well as Street sentiment. Still, coming ahead is inflation data at 8:30 a.m. Economists expect CPI to rise 0.4% in July, and could very well impact markets. Meanwhile, 
Macy's
Apple (AAPL) iTunes loses artists - an antitrust problem?
U.S. Q2 GDP of 3.3% likely to be fleeting
Cramer on BloggingStocks: Don't bother with the private-equity chatter 
