Walmart's "Miss" Is Buying Opportunity

By Jeff Macke  FEB 18, 2010 9:50 AM

The company did quite well, yet analysts are reporting the quarter as a miss -- all because of same-store sales.


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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.

No positions in stocks mentioned.

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