Strong dollar flattens Wal-Mart


Retail behemoth Wal-Mart reported flat earnings for the first quarter of 2009, but given that in this economy, flat is the new double-digit gain, that may be cause for celebration. The company banked $3.02B during the quarter, amounting to $0.77 per share. Total revenues kicked in just short of the flat zone, down -0.6% at $96.37B.

Execs at Wal-Mart said that it would have shown an increase in total revenue were it not for the strong US dollar in relation to other currencies. The company believes exchange rates knocked its total revenue figure down by -4.5%, saying they could otherwise have totaled $98.31B.

The results were in line with expectations. The worldwide economic crisis has consumers focusing on pricing more than ever, and Wal-Mart’s position on the discount side is serving it well.

In fact, analysts believe that going forward it is well-positioned to defeat expectations and tough comps. Wal-Mart certainly sees continuity in the future. “This is not a short-term phenomenon,” said Chief Executive Mike Duke.

RBR/TVBR observation: It comes as no surprise that the strongest earning potential right now is on the discount end of the spectrum. Companies already there need to make sure Wal-Mart isn’t snapping up every single loose dollar in their market, and companies with a little more to offer need to make the argument that spending just a little extra is worth it. Companies in either category that try to ostrich this downturn out probably will not be able to retract their head from the sand when it finally blows over.