Because of Wal-Mart’s sheer volume and scope, economic analysts pay close attention to Wal-Mart sales revenues. Wal-Mart sales revenues are a leading indicator of consumer spending and the overall health of the economy. Sales reports recently for many of bit retailers have been exceeding expectations. An April jobs report shows more hours, more pay and more hiring. Wal-Mart’s sales revenues are down, while Target’s sales revenues are up. But officials from both companies are saying that the consumer comeback many hope will drive the U.S. economic recovery from the Great Recession may not be sustainable.
Resource for this article: Wal-Mart sales revenue clouds U.S. economic recovery predictions
Report on Wal-Mart sales
In a normal week, Wal-Mart has around 100 million shoppers. Shoppers spending their extra cash generate more than $ 400 billion in annual sales. CNNMoney.com reports the Wal-Mart sales report shows revenues worldwide rose 6 percent to $ 99.1 billion, which beat analysts’ forecasts of $ 98.45 billion. However, sales at Wal-Mart stores that have been open at least a year — a key metric of retail performance called same-store sales — fell 1.4 percent in the three months ending April 30. In the same period a year ago, same-store sales rose 3.6 percent. During Wal-Mart’s fourth quarter, a 1.6 percent decline in same-store sales started.
Wal-Mart sales revenues 2010
The fourth quarter of dragging US sales were reported by Wal-Mart sales report logs. The Wall Street Journal reports that Wal-Mart predicted that its U.S. sales would continue to be sluggish this summer as the working-class customers who form Wal-Mart’s base still reel from the effects of the recession on their personal finances. Rising gas prices and unemployment heading into the summer cloud the Wal-Mart customer’s outlook even more.
Target and their sales revenues
The contrast in sales revenues between Target and Wal-Mart say something about US economic recovery in 2010. Target, an emerging rival to Wal-Mart’s demographic, reported a 29 percent increase in first-quarter net income. The Associated Press reports that Target’s rising sales revenues are a huge sign that the retail chain is drawing a ton of customers away from competitors such as Wal-Mart. Still, during a conference call to investors, Target Chairman and CEO Gregg Steinhafel said “Clearly, the economy and consumer sentiment have improved since the weakest point in 2009, but we believe that both are still somewhat unstable and fragile and will likely continue to experience occasional setbacks as the year progresses amid a stubbornly high jobless rate.”.
Economic recovery in the US 2010
During the Great Recession, Target, a Wal-Mart type store, took a big hit. Wal-Mart’s sales and profits rose during the recession as cash-strapped Americans left supermarkets and department stores in search of bargains. Wal-Mart appears to be losing the customers it won during the downturn as the economy gets better. Based on sales figures, many of those customers have taken a baby step up to Target.
Recovery predictions for US economy
For the US economic recovery to be sustainable, Wal-Mart might have to pull out their wallets. According to The CNNMoney.com article, retail sales expanded over the last seven months because 40 percent of current spending comes from 20 percent of the highest incomes. Plus, events like the stock market Flash Crash and European debt crisis have caused the rate of the retail sales increases fueled by the more affluent households has slowed since March.
US recovery is strange and long
More work and money is going to be needed by Wal-Mart’s customer base if they are to shore up the sputtering economic recovery. The U.S. unemployment rate is stuck at nearly 10 percent, the underemployment rate is increasing a lot, wages decline for people who can find any kind of work and inflation-adjusted income is flat. At the current rate of economic growth it will take more than three years to bring the unemployment rate below 6.3 percent, where it was at the peak of the 2001 recession.
U.S. economic recovery headwinds
The retail sector’s outlook, Wal-Mart’s troubles, and the health of the economy at large are facing what Sandra Pianalto, the president of the Federal Reserve Bank of Cleveland, calls a “powerful headwind.” As reported in The Washington Independent, Pianalto said a heightened sense of caution is driven by deep uncertainty that the standard of living Americans had become accustomed to, in the past, will return. Those who started their careers in the mid-1980s have experienced mostly prosperity with the exception of two very brief downturns. Now expectations have shifted as a result of this long and deep recession.
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Wall Street Journal reports
Associated Press reports
As reported in The Washington Independent