Thursday, January 08, 2009

HMS Walmart Warns


StreetInsider reports on Walmart December sales. I will grant one excuse I usually dismiss. The weather was bad in some regions. Of course I've yet to hear good weather given any credit for increased sales.
"Due to the difficult economy and severe winter weather in some regions, the holiday season was more challenging for retailers than expected," said Eduardo Castro-Wright, vice chairman, Wal-Mart Stores, Inc. "We are pleased that we had positive traffic for the third month in a row and that Walmart performed relatively well given the environment."

EPS guidance $1.06 Nov 13th versus $0.91-$0.94 Jan 8th. The morning futures and the stock tanked in pre-market trading.

More evidence of containment not being contained. The talking heads were all inventing unsupportable theories of moving downscale or grabbing market share or I don't know, Princess Ponies pooping pillow mints.

It can only be hoped that bad news actually shows up in the markets. We've been disconnected for far too long. Otherwise we'll all be in the urinal:

17 comments:

Sweet Cashback said...

First to say that I will not claim firstness.

I will let the plebs riot for it at Walmart.

Jake said...

Well, if you could separate us northern states out, I'm sure you would see some numbers down especially the all important last weekend before Christmas. We had a snowstorm that shutdown roads, had icy roads, lot's of cars in the ditch, and below 0 temps, AND that's not including wind chill.

Also, we were all busy interpreting 'voter intent' here in Minnesota. ;)

Hee Hee ... Are you sure Senator Reid? Do you REALLY want Al? And how much again is MN getting from SNL/NBC for material that's not Obama?

Okay dokey then, ya sure ya betcha... Oh lookie there then, we found us so more ballots!!!!

Rob Dawg said...

Snigger. Yeah amazin' how a whole buncha ballots were overlooked in heavily Democratic districts and when they surface weeks later how they skew several deviations more towards Al.

Lance Zambezi said...

Walmart generates so little cash, the stock is worth about $25. It takes Walmart about a dollar in capex to generate a dollar in revenue.

Rob Dawg said...

I also don't trust their "same store sales." I just don't see them squeezing more out of the same footprint year after year.

I had no idea their return on capital was so low. I think there's a real problem with their ability to bully suppliers and transporters. JIT and efficient supply chain doesn't work when you bankrupt your suppliers and truckers. Those disruptions take a very long time to fix.

Lance Zambezi said...

SSS are inflated by building lots more new stores with plenty of grocery sales. Grocery sales are low margin and mask the slow revenue growth. Sales increased $30 billion in 2007, but capex was $15 billion, and if you back out inflation, revenue per dollar of capex looks anemic. FCF was $5 billion, so that's $250 billion of stock and debt sitting on $5 billion of cash flow. Not exactly a port in the storm.

Rob Dawg said...

The net ate my brilliant reply. This is the weak recap:

I agree with almost all of that as long as you continue to be willing to consider that SSS are just plain old fabricated.

I'm also not sure of the value of FCF for companies this large. The usual accounting reply is; "How much do you want it to be?" I too have some mild concerns about debt service.

That said there's a bigger elepnat in the room. Asset valuation is supposed to reflect "the lower of acquisition or market value." WMTs real estate is on the books at absurd valuations. Mark to market would kill their credit ratings. Worse, when they are forced to close some locations they are double hit. The residual value is actually negative. That's a wild claim but hear me out. If the sell, they have a new market model that kills their remaining properties and gives their competitors a new strategic location. If they hold then they continue to accrue holding costs. Thus negative value in a long downturn.

H Simpson said...

Gee, how can that be?
Ships in Long Beach waiting to unload. who else is all that stuff for?

Security guards getting trampled to death at their front doors.

I don't understand how demand can be off.

Do not fret. Once we all get our $500 from Pres Obama, Wallyworld will be back in high gear. Best pick up your Skoal before the mob arrives.

Here is a tip. Take out an insurance policy on Madoff. He is going into stir from all his fun and games no matter how good his lawyers are. And the unions are not amused about him pissing away their money. Just need to call what tool from the prison woodshop is thrust into his back and twisted in the yard..

Rob Dawg said...

Madoff needs to worry about Mossad. For all the mystique they do get the job done. The "unions" don't dare take revenge because they know their place.

Tach said...

Mind blowing/numbing that anyone could have problems with the MN recount. It seems to have been carried out scrupulously fairly. But I guess since the Republican lost it must have been all some grand conspiracy.

Funny that in 2000 when the Supreme Court of the United States *STOPPED* the recount, that was hunky-dory. Bullshit like this makes my dick hurt.

Lorena said...

Actually, I've heard "good weather" claimed for weak sales - the weather was good and people chose to spend it outdoors rather than shopping.

Rob Dawg said...

Mind blowing/numbing that anyone could have problems with the MN recount.

Why, because the new results added were only 3x more in favor of Al than all the previous voting?

It seems to have been carried out scrupulously fairly.

No one on either side says this. You are alone.

But I guess since the Republican lost it must have been all some grand conspiracy.

Yup, just read below where you completely misinterpret the results of the 200 election. Conspiracy theories are most recently thte sole ownership of one side.

Funny that in 2000 when the Supreme Court of the United States *STOPPED* the recount, that was hunky-dory. Bullshit like this makes my dick hurt.

First time poster, long time dick wanker? Jeez, at least get what happened in Florida right. Are you sure you want to oversimplify what happened to a case of the Supreme court preventing a State from exercising its own election laws? Think carefully.

Now, regardless of all you've posted to this point; are we to get you right that because there was injustice in stopping a recount in Florida that makes it only right to stop a recount in Minnesota? There's a word for that.

ncbill said...

Here it is almost cheaper now to buy non-food items (7% sales tax) online (e.g. Amazon, ebay) than at even Wal-Mart.

We're likey to see the above increase to at around 7.5%, but not to over 10% that those in Kalifornia face.

Only a 2% tax on (non-prepared) food items, so we'll get those locally (or on our once/month trip to Costco)

Rob Dawg said...

Two quick comments before the new post.

First, no laughing at the second picture?

Second, NCBill has the pulse. LA is going to 10.5% soon. My local Fry's is up 1/2%. I'm not buying it. Literally. Next big purchase I'm actually planning a sting. I'm going to go Fry's and buy$300-$400 of stuff and then when presented with the bill at checkout complain about the new sales tax and refuse to sign. Everyone should do the same in Oxnard at least once. Arlo Guthrie Strategy.

Kasey Skala said...

Regarding the MN election...it was odd that all the ballots that were missing or not counted went for Franken. Also weird how one county had more votes than voters registered. This made MN look like crap. I was sure to email Mr. Ritchie and explain how proud I was of the job he did. Blah, get me out of this liberal State, please!

Tach said...

Wow Rob, touched a nerve did I. Not a first time poster, I offered advice to you on the biotech/pharma industry (being in the industry), that you chose to ignore.

The MN recount was carried to completion, as required by state law. Surely you're not going to compare the two situations?

I think I'm done with Exurbannation. Your politics are so simplistic that it's starting to overpower any insight into the housing market here.

Property Flopper said...

Rob -

Good idea on the protest... I'm sure the clerk you talk to (and the poor schmuck who has to return all the items) will remember that and vote "NO" the next time they're elected to state legislature and are voting on the sales tax.

Seriously, how will this help? The clerks suffer, the manager of the store may hear about it, but probably won't. Outside the store? Nobody will hear about it.

Not terribly effective.

BTW: I used to work retail way back in the dark ages. Loved it when they started jacking up the tax on cigarettes... had people swearing at me because of it. Like I had anything to do with it.