Are Wal-Mart's Better-Than-Expected Numbers a Good Thing?

Sat, 10 May 2008 23:03:18 +0000

Stan and Pete,

What jumps out at me is that a 3.2% gain in revenues seems to barely keep pace with inflation. Based on the March numbers, core inflation was 2.4% and inflation in food and beverages was 4.4%. (Wal-Mart's release excludes fuel sales but includes grocery sales.) So if this were taken as a sign of strength in the economy, I think it's not a very positive sign. As Pete notes, we should consider the retail sector as a whole and just be patient to get the numbers as they become available.

I think we should also bear in mind that despite what folks may think, Wal-Mart is not the bottom of the hierarchy in the retail sector. Plenty of people shop at dollar stores and the like and would love to be able to shop better at Wal-Mart. The same store sales may reflect some people on the way up in addition to the many folks that we suspect are on the way down the socioeconomic ladder. It may not quite be the inferior good for the economy as a whole that Stan suggests.