Posts Tagged ‘walmart’

Compare these two recent articles, courtesy of the Wall Street Journal:

Family Dollar Stores Inc. posted a bigger-than-expected 6.4% increase in same-store sales for its latest quarter as the discount chain boosted its earnings forecast for the period on strong demand for consumable goods.

The company sees earnings for the fiscal second quarter ended Saturday of 59 cents to 61 cents. Family Dollar in January projected 48 cents to 52 cents a share, slightly above analysts’ then-estimates, with same-store sales rising 3% to 5%.

Compare that report to this one:

NEW YORK – Macy’s Inc. said Thursday that sales at stores open at least a year were down 8.5% in February. Analysts at Thomson Reueters estimated Macy’s same-store sales would fall by 7.3%. Total sales for the four weeks ended Feb. 28 were $1.58 billion, down 9.3% from a year ago.

When times get tough, everyone backs off a bit. Walmart posted a 5.1% rise in February sales and Target plans on opening a number of stores in the next few months. The secondary (liquidation) market is doing really well these days also. Big Lots was quoted as saying that the current down turn in the real estate market is a great opportunity for Big Lots to expand and open new stores in new markets.

As with everything these days, it is all about SAVING money.

I spoke to a friend of mine at Walmart today. I had heard that Walmart announced they were laying off 700 people in their Home Office and I wanted an insider’s take on the deal.  While this wasn’t the first time Walmart has had a layoff at corporate, the timing seemed interesting. Walmart released pretty good results and seemed to be the best performer of all the Dow components, not to mention the retail world in general.

To put it into perspective, the impact on the local economy of laying off 700 people in Northwest Arkansas would be the equivalent of a company in New York layoff 58,000. It is going to hurt, if not in fiscally, certainly mentally.

My friend, who works for Walmart in the Home Office, had two interesting points of view, both showed how insulated he was  by living in small town America and working in Walmart.  His first point was that these layoffs were really cuts that needed to be made because these folks were not earning their keep.  Timing would avoid bad press. If you are Mike Duke, Walmart’s new CEO, you probably know you need to trim some fat and now is the best time. You won’t look like the new greedy CEO to the Walmart Associates or your investors.

His second comment showed how insulated he really was from the world outside of Walmart. He said “Boy, the minute they announced the layoffs, the stock sank like a stone!” I soothed his fears by telling him that all the Dow stocks tumbled because of our new Secretary of Treasury’s speech.  He had not heard that because at Walmart you don’t watch TV when you are working in your office.  All he knew was that Walmart announced layoffs and the stock fell through the floor. “A+B” has to equal “C” right?

In thinking about this, I began to wonder what if the national media; ABC, CNN, NBC, the Wall Street Journal, all of them, what if they were tying things together that did NOT go together to prove their point? What if the economy is in recession, but the voices of doom and gloom are blowing it out of proportion in a big way?

Remember, it was the same group of pundits that were referring to this same economy eight months ago as “Goldy Locks”, that is to say it was “just right.”  They clearly didn’t see the fall coming and I doubt if they have a clue when we will get things turned around. They remind me of the guy who when asked why he was a pessimist said that pessimists were never surprised nor disappointed.

If you are a talking head, you have to protect your credibility,  so the safe thing to do is to ring your hands and make dire predictions and criticize all actions as too little, too much, or too late.  If you are wrong, nobody will care and if you are right, well, you won’t get laid off.

Maybe we should remember that all we have to really fear is fear itself. I think we are going to be fine. Keep the faith. Go buy something nice for Valentine’s Day. The economy could use the cash flow and your honey will love you for it.