Editor's Note: The following was posted in real time on our premium Buzz & Banter (click for a free trial).
Greetings from New York where there aren’t a whole lot of Walmarts (WMT) yet the thinking analysts still should have seen Walmart's same-store-sales miss coming. Why? Because Walmart doesn’t report SSS monthly like the rest of the retail world. Take it from someone who was on the board of a much, much smaller discount chain for years: Retail management hates same-store-sales reports. They're a hassle to report, analysts focus on them too much, and managers want to focus on the bigger picture. Regardless, good board members insist on chains reporting the number the first Thursday of the month, as per custom in the retail world. The reason is simple: Communicating with the Street monthly is better than surprising the Street quarterly.
Walmart beat EPS estimates by a decent margin and sold well over a billion dollars a day in merchandise. The juggernaut is controlling expenses in the face of a weak consumer. Make no mistake, when you sell $1.1 billion a day in goods, you aren’t going to exceed consumer consumption. Walmart did what it could and it did it quite well, yet analysts are reporting the quarter as a miss -- all because of same-store sales. The “miss” supports an axiom not just in retail but in all the corporate world: When companies act like they have something to hide, they usually do. From where I’m sitting, a $1 decline or more in Bentonville’s finest is a buying opportunity. See also Walmart: The Leaders We Deserve.
Here’s what else I’m watching.
- Tiger will speak on Friday! No reason to explain that statement; if you don’t know what it means you live in a cone of silence. Tiger’s presser is must-see, not because of the suspense as to what he’ll say (he’s sorry and he’ll play the Masters after one tune-up). The Street will be tuning in to see how successful Nike’s (NKE) PR crew is at getting Tiger to sound convincing about his treatment of the Tiger army. Nike needs Tiger more than Tiger needs Nike; unless young Eldrick is on his communication A-Game he could be the first sponsorless number-one golfer in the world since Babe Didrikson.
- Speaking of sponsorship, is it any wonder General Electric's (GE) (for the time being) NBC is taking a bath on the winter Olympics? I grew up in Minnesota, actually know how to skate and ski, and I have a little crush on Lindsay Vonn. Regardless, I can’t think of a single product on display that I'd possibly buy, save for feather hand covers and one of the rifles from the biathlon which aren’t even being advertised.
- It’s not you it’s the tape. Earnings really have been quite good and not just against last year’s comps. Still, the tape is mired about where it was in November, not to mention February of 2000. The reaction to last quarter’s earnings has been fairly tepid, albeit better than last quarter. Put it this way, if you’re a buy-and-hold type and have had a great trailing quarter -- or for that matter, decade -- you’re either insanely good or a secret trader. Nothing wrong with either.
- Walmart’s little brother Target (TGT) reports next week. The Street is looking for 1.16 and Target has guided to 1.12. One thing is a lock: Target’s same-store sales will be positive and not at all surprising. The company reports SSS monthly.
No positions in stocks mentioned.
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