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Wal-Mart’s (WMT) US same store sales rose 3% in August. Analysts expected about half that growth rate.
The Wal-Mart news is almost certainly a sign the the middle class is joining those below the poverty line in making the huge retailer their first and only place to shop.
It is also a signal that the recession may be deepening. Wal-Mart’s "everyday low prices" allow shoppers to stretch a buck. The fact that it is not fashionable to visit the stores is left by the wayside as consumers run out of money.
The only cloud in Wal-Mart’s silver lining was international sales. Revenue from overseas was only up 13% for August. The number has been rising at 17% year-to-date.
August global revenue at WMT rose almost 9% to $30.7 billion. Clearly the law of large numbers does not currently apply to Wal-Mart. Many smaller chains are losing customers and losing money.
Being the low cost provided sometimes has its advantages.
Douglas A. McIntyre
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