Wal-Mart Reports First Profit Decline in More Than a Decade

[Human Torch]

Wal-Mart Reports First Profit Decline in More Than a Decade

Aug. 15 (Bloomberg) -- Wal-Mart Stores Inc., the world's biggest retailer, reported the first decline in profit in more than a decade on costs to sell its German unit.

Net income dropped to $2.08 billion, or 50 cents a share in the three months through July 31, compared with $2.8 billion, or 67 cents, a year earlier, the Bentonville, Arkansas-based company said today in a regulatory filing. The last time Wal- Mart's earnings fell was the fourth quarter of fiscal 1996.

Since entering Germany in 1998, Wal-Mart has lost money amid stagnant consumer spending and competition from discounters including Lidl. Last month, Wal-Mart agreed to sell 85 stores in the country to Metro AG, resulting in a second-quarter charge of $863 million.

``Sometimes it's better to endure short-term pain so that the firm can heal and move on,'' Patricia Edwards, a Seattle- based portfolio manager at Wentworth, Hauser & Violich, said July 28. The firm has $8.2 billion in assets, including Wal-Mart shares.

http://www.bloomberg.com/apps/news?pid=20601103&sid=akAKuaWh7RhY&refer=news

[Ian David]

1. Die, Wal-Mart, Die! n/t

[acmejack]

8. The economic downturn is starting to be felt?

People are starting to hurt, businesses such as maid services are seeing a marked fall off in business. Things people can do without, they are.

[NMDemDist2]

2. well that's good news IMO. my small town has a WalMart and I refuse

to step foot in it

I pay a little more, or make a trip up to the KMart 30 miles away

[rsr1771]

14. Wal-Mart Bashing

I know its hip to bash Wal-Mart for a lot of their policies, but the bottom line is that they are cheap. I've talked to a lot of people who shop there, and they say the same thing- that they can buy more stuff at a cheaper price at Wal-Mart.

Would you rather have poor people pay more money for food at the local mom and pop store? It seems that Wal-Mart has become a symbol for what's wrong with the American economy- low wages, not providing health care to many of its workers. But you can't deny that they provide cheap goods for regular people.

[ClassWarrior]

21. I'm not greedy enough to make someone else pay that high cost for my...

...low prices. Are you?

Do a little research: WalMartWatch.com

NGU.

[Lochloosa]

22. I have never seen anyone claim that you cannot buy goods

cheaper anywhere else.

That is not the point.

What price do we pay for those few pennies per item. Higher taxes to pay for welfare, food stamps and health care.


I will never step foot in a Walmart or Sams club. Never.

[MadHound]

28. Price of WalMart goods might be cheap

But if you consider the full costs of bringing you those low low prices, you will find that WalMart is prohibitively expensive.

For instance, in every single town that WalMart moves into, for every job the store creates, two others in the community are lost. The goods that you see displayed, from produce to that little plastic doo-dad are overwhelmingly produced overseas. With either slave labor in China, or very low paid labor in other countries. It was this push by WalMart(and other smaller retailers) that rammed NAFTA through, and has cost this country virtually the entire manufacturing sector. Oh, and if you are against illegal immigrants, once again WalMart is part of the problem, since they vigorsly lobbied for NAFTA, which wiped out the Mexican agricultural sector, thus forcing tens of thousands of illegal aliens north, looking for any kind of work.

Also, WalMart doesn't give anything back to the community like a local, or even regional business does. Your local WalMart doesn't deposit the money it makes into a local bank, no, each and every night it ships it off to Bentonville Arkansas. Nor do local WalMarts buy any sort of newspaper ad space. In fact as it drives one business after another out of business, the local papers suffer or fail. WalMarts have regularly been shown to turn once thriving downtowns into blighted areas of poverty.

And as far as those low, low prices go, don't count on them to stay low, especially if you live in a small town. Once WalMart has driven every other relevant business into the ground, WalMart habitually starts jacking up prices, even beyond those of their former competitors. After all, they now have a captive audience, what are they going to do, drive sixty miles to the next town over?

Sorry friend, but the prices that WalMart charges aren't the only ones you're paying. Once you sit down and take into account all that WalMart is costing you, jobs, a vibrant town, pollution, slave labor, etc., you will find that you simply can't afford to shop there anymore.

[panader0]

3. Wow! I didn't know that when I stopped shopping there it would have

such an Impact.

[tanyev]

4. You must have bought lots of stuff there!

[Mr_Spock]

30. Add a few thousand more of us to that list

I have been boycotting 2 years now.

[tanyev]

34. Oh, me too.

Although I think my disgust with the shopping experience there kept me away long before I knew how evil they were.

[Freedomofspeech]

5. Boo-Hoo...

I never shop there, and make my friends feel guilty if they do. Fortunately we still have a Kmart, but it is always on the verge of closing thanks to that ugly walmart.

[morningglory]

6. Could we be getting to 'em? Or are the Wal-Martians so broke they

can't buy Chinese doo-dads in the quantities WM requires?

[marmar]

7. "Or are the Wal-Martians so broke they"

I think you might be on to something.

[Virginia Dare]

15. I think that's probably correct...

people are spending money on necessities, and not on impulse items, which typically have the highest mark-ups/profit margins.

[TheCowsCameHome]

9. You don't suppose folks have less $$$ to spend, do you?

Nah.

[Broken_Hero]

12. I'm not positive about the German store

in question, but lax winters, and the high prices of Gas have effected Walmart greatly. People are spending more $ on Gas, hence they aren't spending their extra $ on dvds, clothes, whatever...

What I mean by lax winters, walmart had some setbacks/losses last year, because they pushed a lot of winter clothes, and apparell, and other items for winter use, and whammo, winter was lame/mild. Walmart, took a hit from that.

Again, this is in no way related to the German store in question, but is relative to their stores in the USA.

[Lowell]

10. What now? Wal-Mart to cut employees benefits?

There has been such a drive to educate the public about the evils of Wal Mart perhaps that, and the stagnant economy is finally catching up.

[Virginia Dare]

17. Yes, I've been sitting back popcorn in hand...

wondering when this vicious cycle was going to implode on itself. Wal-Mart has largely contributed to the downfall of the American economy, they counted on mitigating this by opening up in foreign markets. Apparently that's not going as well as they had planned.

Plus, I think there is corruption and infighting amongst the upper echelon. Since the old man died, there hasn't really been anybody who has had a tight grip over the business, and his kids aren't at all up to the task.

[newportdadde]

11. This is a pretty good indicator of things to come.

A huge retailer like Walmart reporting a decline like this is very significant especially given the number of people shopping there has only increased even more over the past decade. I think this is a further indicator that the folks spending like fiends on home equity lines of credit are having the tap turned off. I'm sure credit cards are being used now but they don't have the same punch... once those are gone... look out.

[NewJeffCT]

13. Their actual results are a slight increase

They took an almost $900 million charge for selling off their business in Germany. If you take that unusual item out of their results, their profits actually increased slightly, from $2.8 billion last year 2nd quarter to $2.9 billion this year 2nd quarter.

That Wal-Mart's continuing businesses did okay, but not great.

Besides, they still made a profit of over $2 billion for the quarter. It was just a decrease in the amount of profit, not a loss.

[sweetheart]

19. Why the german business failed was pure imperial arrogance

They really screwed up in germany, and had to run away with their tail between their legs,
sorta like how cocacola had to stop selling dasani water in the UK after their screwup,
imperial miscalculation that a foreign culture is just another american state.

Walmart is currently stupiding in the scottish highlands, where most people want them
to build a store (as ASDA), but the site they've chosen is the wrong site and the council
and local people are right to block the planning application recommending that ASDA use
another site more in tune with the town-plan.

And the arrogant manager of walmart put in the paper his ultmatum, its that site or there
won't be any.!! And the empire puts its foot down on democracy with artless foolery and
is defeated.

THe omens of stupid management abroad, suggest walmart will suffer ongoing profit chargoffs
as its markets no longer expand... its not a one-off, a correction is in order.

[napi21]

16. Lots of things contributed to this "loss".

Cosing down their operation in Germany is a BIG one time hit in one qtr., and there was another country they also pulled out of (Japan I think) which also affected profits. A bigger effect though, is the high cost of gas. THAT impacts WM shoppers more than it does almost any other group of people. When you a specific amount of $$ to spend, and one necessity (gas) doubles in cost, there's kist mo $$ left to spend on anything else.

What many people don't realize isthat stores like WM make almost ZERO profit on groceries, and take a loss on some items. Their business model is to use the "Groceries" which are a necessity for everyone, to bring people into the stores where they will spend $$ on many of the other profitable items in the other part of the store. Many people are still buying their groceries at WM because they really are cheaper on most items, but there's no $$ left for anything else, thus WM "Profits" are down.

[no_hypocrisy]

18. Business 101: Saturation of the market(s). n/t

[warrens]

20. If you look at all their operations

They're not doing particularly well in any area. There have been a lot of big mistakes made. It's still a juggernaut, but one that is slowing down. And WM is like a shark: swim or sink. Pulling out of Germany was a pretty amazing admission of error; they got hammered there from day one. They pulled out of Korea too. And things are not going well in China and just so-so in South America.

They're so married to price, it's ALL they've got. And there are a lot more reasons to shop a store than price.

[Contrary1]

23. I just shake my head in disbelief

when I hear people say they can get the "exact same thing" at Wallyworld so much cheaper.
The fact is, in most cases, it is not the same exact thing.

May have the same company logo though, which seems to fool a lot of people.

[Broken_Hero]

24. examples?

I can go to best buy, and get a dvd for 6.50, and go to walmart, get same dvd for 5.50...its cheaper, correct?

[Contrary1]

25. I read a few years back that Walmart

has exclusive contracts with some manufacturers to get a cheaper version of their products.
If I remember correctly, it was mostly clothing.

I'll see if I can dig up the article.

[ClassWarrior]

26. They pressure all of their suppliers to provide them with "exclusives."

NGU.

[Broken_Hero]

27. Okay...:)

I know there are differences in prices in a lot of things, some better at walmart, some worse. IMO food items are cheaper else where, especially eggs, milk, meat, can food. Usually the rest is comparable, like bread, cheese, frozen foods, and what not.

The biggest differences I do see are clothes, and electronics. I see the same JVC/Sony stuff at walmart, that I do at Best Buy and what not, yet its cheaper at Wally World. The clothes are a lot cheaper, in most cases. For perfume, body hygiene, the Dollar store is a bit better, but doesn't have the range of products/name brand that walmart carries, but other stores are pretty comparable to the same products.

As far as outdoor, auto, tools, walmart is comparable, but you get what you buy for there. For tools you can spend 4 bucks for a pair of vise grips at walmart, and they will snap in a few months, or spend 10 bucks at say, O'reillys Auto store, and the things last forever.

Shoes, are a lot cheaper in some cases, depending on taste, payless is very comparable though, and have better cuts. Low end jewelry, is a lot cheaper than jewlery stores, I can vouch for that, but again, you get what you pay for.

I am the man of the house, meaning I'm the one who goes out shopping, groceries, pay bills, do the running around, and with money and the way things are right now, I have to be on top of things, and stretch my dollars. I do think, Walmarts greatest advantage is, simply location, and its a store with a ton of different items in there, for comparable, if not cheaper prices than its competitors.

The closest decent grocery store to me is over 30 miles away, and a round trip is close to 67 miles, so walmarts location is key. Most of the food items at walmart are comparable, but there are lower end groceries stores that blow walmart out of the water, but again, its lower end food as well. For other items, I see walmart a step ahead, or two steps ahead, and suffering on lack of quality on some items, primarily tools, but again, you get what you pay for. Spend 4 bucks on a hammer, and it breaks on you, yeah, spend 8-10 bucks at Joe's hardware, that lasts forever....

on edit:to clarify...

[low_phreaq]

29. Walmartopia The Musical! arrives in NYC!!!

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=364&topic_id=1911144&mesg_id=1911144

[upi402]

31. Wal-Martyrs just keep growing back foots to shoot themselves in

Like lizard tails.:dunce:

[Swamp Rat]

32. Yaaay!!!

:bounce:

[Control-Z]

33. WooHoo!

I've been boycotting Walmart for two years now! I see my hard work is paying off.