Wal-Mart Exceeds Estimates, Sees Sluggish Holiday Season

On November 12, Wal-Mart reported earnings for the third quarter ending October 31 of $3.24 billion or 84 cents a share, up 3.2% from last quarter’s results. Analysts expect earnings of approximately $1.12 per share for Wal-Mart’s fiscal year fourth quarter, while the world’s largest retailers expect $1.08 per share.

Eduardo Castro-Wright, Wal-Mart’s U.S. chief offered tempered guidance in last Thursday’s conference call, warning about customers being cautious in their holiday spending. Other prominent retailers, such as Macy’s and Kohl’s provided similar guidance, expecting sales to be slightly below analyst estimates.

While we’ve seen the equity markets skyrocket over the last six months, it doesn’t seem as if their gains are instilling any life into consumer confidence. Investors are most likely asking whether or not aggressive pricing strategies can do anything to bolster the bottom lines of these big-box stores, and if any higher-end retailers can compete.

With unemployment hovering above 10%, and real unemployment right around 18%, this holiday season should certainly be sluggish, which makes Wal-Mart, TJX Companies, and Family Dollar very enticing to investors.

http://online.wsj.com/article/BT-CO-20091112-713379.html

~Group 8