retail news in context, analysis with attitude

Walmart said yesterday that its second quarter results were softer than anticipated, with revenue up 2.3 percent to $116.9 billion, less than projected by analysts. Sales at Wal-Mart U.S. stores open at least 12 months excluding fuel fell 0.3 percent, while Q2 net income rose 1.3 percent to $4.07 billion from $4.02 billion a year earlier.

The company said that its growth has been slowed by an increase in Social Security taxes that has reduced the amount of money people have to spend in stores; it also said that an increase in gas prices didn't have the anticipated impact.
KC's View:
Are these reasons for a disappointing performance? Or just excuses?

Here's what always amuses me. When a retailer has a bad quarter, management says that it was so cold that people didn't go shopping, or so hot that people didn't go shopping, or that the weather was so nice that people went to the beach instead of going shopping. But it's never because the competition did a better job, or the retailer itself didn't do a good enough job, or didn't have the right products or the right promotions. There's always a reason. Or, more accurately, an excuse.

Under normal circumstances, you'd think that consumers having less money to spend would be a good thing for Walmart. That it would be a reason for people to go to Walmart rather than to other retailers. But that doesn't seem to be what is happening. Rather, they're going to Aldi, or to WinCo, or to Kroger, or to Amazon.com.

Walmart's current solution? Bigger beer selection. That'll fix things.

Sure it will.

Walmart's got a ton of real challenges. The ongoing bribery scandal in Mexico and elsewhere. Questions about how it compensates its employees. Continuing court cases alleging that it discriminates against women. And a general image problem that creates doubt about the sustainability of its business model.

Though let's be clear. Walmart is enormous. It makes a ton of money. It has a ton of stores. It won't be going away anytime soon.

But Walmart has serious problems to address, and the question has to be asked: Is the current regime the right one to put Walmart back on the right path? And, as is suggested in our next story, the new Sam Walton may be working somewhere else.