After Wal-Mart (NYSE:WMT) reported higher third-quarter earnings and predictions of a "strong" holiday shopping season, the Dow Jones Industrial Average (DJIA) surged 320 points after taking a battering over the previous week.
But you had to know that somewhere, someone in the media would be able to find a downside.
"[T]here's already evidence tonight that middle income Americans feeling the gas squeeze already might be turning to those discount retailers. Just today Wal-Mart revealed earnings well above what they were expecting," ABC Correspondent David Muir said on ABC's November 13 "World News with Charles Gibson."
While the November 14 Wall Street Journal reported "tight controls on costs and inventory fueled a better-than-expected fiscal third quarter profit." However, Muir didn't credit Wal-Mart's competitive advantage with boosted sales, instead he pinned it on a weak economy forcing consumers to shop at Wal-Mart.
Muir predicted more problems for other businesses.
"The most affected - mid-priced restaurant chains like Chili's (franchised by Brinker International (NYSE:EAT)) and Applebee's (NASDAQ:APPB)," Muir said. "And at the mall, middle-of-the-road retailers will be hit hardest, as well. J.C. Penney's (NYSE:JCP) and Gap (NYSE:GPS) have already shown declines. Experts say discount stores like Wal-Mart will fare better because families will be looking for a deal."
Aaron Katsman, lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC, dismissed that theory and wrote on the BloggingStocks blog on November 13 that the Wal-Mart news is a sign our economy isn't in trouble, despite Muir's dour interpretation.
"This is just another sign that the US economy is strong enough to withstand the subprime mess, rising commodity prices, and the general negativity portrayed by the mainstream media," Katsman wrote. "Haven't we been warned that consumer spending is going to tank, because of the effect of the subprime meltdown, and rising fuel prices will keep shoppers at home. Well Wal-Mart, which derives so much revenue from the very shoppers that are supposed to be staying at home due to rising fuel prices, said that they expect consumer spending to be higher than expected."
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MSM snobbery
November 14, 2007 - 20:20 ET by nkviking75Yeah, it couldn't possibly be that people like shopping at Walmart, or that Walmart may have tweaked their procedures to improve profits. MSM snobs.
When you put the clowns in charge, don't be surprised when a circus breaks out.
This stuff can be fun!
November 15, 2007 - 11:41 ET by pbanks7I was having a discussion with a socialist coworker re Wal-Mart. It is bad because it creates a monopoly - it is the only place people will shop in their area. Monopolies are BAD! When I pointed out that it is not a monopoly and people are welcome to pay higher prices elsewhere, he replied that it was still bad because Wal-Mart drives down wages. Yup, people are forced to shop there and work there!
He could not be persuaded that the only monopolies are created by governments, but had no problem with government monopoly of schools. I remembered too late to ask him who decided which university he could attend. Dang!
In typical socialist fashion, he thought things could be done better, but had no response when I asked him who gets to decide. And this guy is studying accounting.
He doesn't like discussing politics with me any more. :^)
Ignorance is bliss. It's easier to repeat a mindless slogan than to do some actual research.
The meida will say that
November 14, 2007 - 21:23 ET by Sonny LykosThe meida will say that because the economy is so bad, and the middle class is being impacted so negatively, that they are all "forced" to buy at Wal-Mart. that's why Wal-Mart is doing so well.
The meida will say that
November 14, 2007 - 21:40 ET by motherbeltThe meida will say that because the economy is so bad, and the middle
class is being impacted so negatively, that they are all "forced" to
buy at Wal-Mart. that's why Wal-Mart is doing so well.
They already did:
"[T]here's already evidence tonight that middle income Americans
feeling the gas squeeze already might be turning to those discount
retailers.
You gotta love it....in every bright blue sky, they can find a cloud, somewhere.....
A dark cloud in every silver lining:
November 15, 2007 - 11:44 ET by pbanks7As Violence falls in Iraq, cemetery workers feel the pinch
Ignorance is bliss. It's easier to repeat a mindless slogan than to do some actual research.
All the WalMart stores in my
November 15, 2007 - 09:30 ET by msh1973All the WalMart stores in my hometown have remodeled. They are actually very nice to shop in now...very clean and "department store" like. My husband I will more than likely do most of our Christmas shopping at WalMart.
value
November 15, 2007 - 12:41 ET by lastconservativeinmaPeople shop for value. If Walmart has what I am looking for and it is cheaper than the store accross the street why wouldn't I shop there. If you want all this to go away just have the employees unionize and Walmart will be the greatest store in America. You see, unionized employees perform better. Just ask the TSA.