Wal-Mart’s Earnings Suggest Wary Shoppers

The following is an excerpt from an article in 

The New York Times
Friday, August 17, 2012

Wal-Mart’s Earnings Suggest Wary Shoppers

By STEPHANIE CLIFFORD

Consumers in the United States still seem to be holding their breath.

Wal-Mart Stores, the nation’s largest retailer by far, reported quarterly results on Thursday that its executives said reflected a strained consumer, adding a sober note to more upbeat earnings reports from other retailers this week.

“Consumers aren’t panicked about the economy, but they are worried,” Craig Johnson, president of Customer Growth Partners, wrote in a research note. Sales growth for top retailers slowed to 3.4 percent in the second quarter of 2012 compared with a year ago, according to Mr. Johnson’s analysis. In the first quarter, sales rose 6.2 percent compared with a year earlier. (Thirty of the 40 major retailers he tracks have reported quarterly results so far.) Consumers “are still buying, but they’re buying less and they’re buying closer to need,” he wrote.

Wal-Mart’s results suggested that shoppers in the United States — particularly low- and middle-income shoppers — remained stretched thin and wary about splurging. Sales at the company’s stores open at least a year rose 2.2 percent in the United States, which was its fourth consecutive quarter of same-store sales growth domestically. However, executives said that did not mean the American shopper was feeling especially cheery.

“I don’t think the economy’s helping us,” Charles M. Holley Jr., Wal-Mart’s chief financial officer, said in a call with reporters. Customers are still very concerned about employment, gas prices and food inflation, he said. “If anything, our consumer’s probably being a little more stretched because of gas prices.”

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