Wal-Mart On A Roll
Kurt Brouwer June 5th, 2008
The Wall Street Journal’s MarketBeat Blog is one of my first reads in the morning. In this post, David Gaffen points to strong results for that icon of middle America — Wal-Mart.
Folks Gotta Eat, As Wal-Mart Shows (MarketBeat Blog, June 5, 2008, David Gaffen)
The nexus of constrained consumer budgets, high fuel prices, and the one-time windfall of the government’s stimulus checks is in the parking lot of the nearest Wal-Mart, Costco, or other major discounter.
Shares of Wal-Mart and Costco both moved up sharply following May retail sales reports that were bolstered by purchases of grocery items, gasoline and other necessities that these stores sell at lower prices than other retailers.
…Wal-Mart, in its commentary, cited the stimulus checks as a factor in May’s strength, adding that “our focus on price leadership continued to drive the performance in grocery.” BJ’s Wholesale Club Inc. posted an 11% increase in sales of perishable food items, bolstering that company’s sales.
With food and gasoline prices remaining high, Mike Binger, portfolio manager at Thrivent Asset Management in Minneapolis, says the discounters “are the ones consumers are being driven to because the consumer is constrained.”
Wal-Mart has weathered the downturn well — shares are up 21% since the beginning of the year, making it the best performer among the members of the Dow Jones Industrial Average. BJ’s, which is down Thursday, has also done well, gaining 20% headed into Thursday trading.
Oddly, these big-box stores may also benefit from high fuel prices because consumers can buy apparel, groceries and other non-discretionary items all in one location, thus saving on gasoline that would be spent making trips to several stores.
Wal-Mart’s outlook for June is strong; the company expects a 2% to 4% increase in sales. “Consumers have to buy where they perceive they’re able to get a good value,” Mr. Binger says.
I read recently that Wal-Mart saves Americans over $100 billion on basic goods each year. The company is also moving forward aggressively with walk-in medical clinics as this New York Times piece [emphasis added; free registration required] indicates:
Wal-Mart Will Expand In-Store Medical Clinics (New York Times, February 7, 2008, Milt Freudenheim)
Moving to upgrade its walk-in medical clinic business, Wal-Mart is set to announce on Thursday plans for several hundred new clinics at its stores, using a standardized format and jointly branded with hospitals and medical groups.
...Many patients have said they like the convenience of the walk-in clinics’ weekend and evening hours, the short waiting times to see a nurse practitioner, and the posted price lists for a limited menu of care like tests and prescriptions for sore throats and ear infections and seasonal flu shots.
The typical customer is a mother with runny-nosed children in tow. About one in five customers pay cash. Wal-Mart says 55 percent of patients at its store clinics do not have health insurance, like 47 million other Americans.
“The clinics are the latest big example of how you could think about consumers and what their needs are, rather than a health care system exclusively designed around the needs of providers,” said Margaret Laws, director of an innovations program at the California Health Care Foundation, an independent group that finances health policy research…
I don’t know if this is right model for delivery of basic medical services or not. What I do know is that Wal-Mart is doing something in this area and that is a good thing. All the committees, symposiums, conferences, press releases and so on won’t actually do anything to help people. It takes a pioneer to actually put something into practice to find out what works. Good for Wal-Mart.
- Business , Economy , Geopolitics , Money , Personal Finance , Retirement
- Comments(0)
Did you enjoy this article?
