Stock of the Day
|
Wal-Mart (WMT)
Wal-Mart Fails to Meet March Expectations
Wal-Mart Stores Inc. (WMT: Charts, News, Offers) announced today that its U.S. in-store sales rose 1.4% in the March, yet many analysts considered the news disappointing. Most of Wall Street anticipated that the world's largest retailer to post a 3.2% increase. The Wal-Mart establishment is generally considered recession immune, but this recent report may have identified a chink in the retailer's armor. Why did Wal-Mart miss expectations by so much? Is this merely an off month or an indicator of future performance?
|
| Daily Chart |
If you are not able to see the chart, your email client probably does not support javascript. To view it, please click here
|
| Stock Analysis |
A major reason for the lower than expected March performance was the holiday schedule. This year the Easter holiday is in April, whereas in 2008 the holiday landed in March. Wal-Mart's sales numbers did not receive the usual Easter boost this March. The "Easter Effect" was definitely a major factor behind the disappointing March performance. In addition, Wal-Mart has admitted that the recent economic downturn has hindered its ability to make accurate monthly performance forecasts. The discount retailer may have set itself up for failure with an overly ambitious March prediction. As a result, Wal-Mart Stores Inc. will only be making quarterly forecasts moving forward. Unfortunately, Wal-Mart had some more bad news to report today.
|
The world's largest retailer also commented that its international in-store sales dropped 14.8% to $8.1 million for the five weeks ending April 3rd. Wal-Mart saw same-store sales declined in Canada and Brazil while rising in Japan and Mexico. Wal-Mart Stores Inc. was hurt internationally by the growing strength of the dollar. In addition, the Arkansas-based company continues to struggle with enticing Chinese consumers to increase spending. Wal-Mart noted that the majority of Chinese consumers are very cautious with their money at this point in time. This news cannot sit well with Wal-Mart as it looks to bolster its overseas sales. The combination of the stronger dollar and Wal-Mart's erratic international sales performance were the driving forces behind its drop in sales.
|
It seems that the economic recession has finally reached Wal-Mart's doorstep. Wal-Mart will probably continue to perform better than most of its competitors, but this economic downturn has escalated to a level that even the world's largest retailer cannot avoid it. Despite missing March's forecasts, Wal-Mart claims to be in a position to meet the higher end of Wall Street's April performance expectations. The retailer is relying on the Easter holiday to generate a largely anticipated boost in sales. Wal-Mart is also hoping that April's projected "strong" performance will be enough to satisfy investors after March's disappointment. Wal-Mart will find out soon enough if the Easter bunny has enough eggs in its basket to save the retailer from last month's sub-par performance.
|
Profile |
Click here to view a detailed profile of Wal-Mart.
|
|
|
|
|
