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Walmart sees 1st profit drop in a decade

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posted on Aug, 15 2006 @ 01:17 PM
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heres the story

BENTONVILLE, Ark. - Wal-Mart Stores Inc., the world's largest retailer, posted its first profit decline in a decade Tuesday as second-quarter earnings fell 26 percent due to the cost of selling its Germany operation.


But results were still in line with expectations and the company reiterated its guidance for the year. The company's stock fell 42 cents to $44.68 in pre-market trading.

For the quarter ended July 31, the company posted net income of $2.08 billion, or 50 cents per share, down from $2.81 billion, or 67 cents per share, a year ago. That includes a hefty $863 million charge related to the sale of its German stores to rival Metro AG.

The last time Wal-Mart saw quarterly profit fall was in 1996. But the decline this time is based on a one-time event — the German sale — and profit was up after setting aside operations in Germany and South Korea that are being discontinued,Excluding South Korean and German stores, the sales of which are both pending, Wal-Mart's income from continuing operations grew 5 percent to $2.98 billion, or 72 cents per share, from $2.85 billion, or 68 cents per share, a year ago.



Seeing as im not a big fan of walmart, i dont feel that bad for the company at all. but other than what as been suggested as the reason, with all the talk of war coming on, do you think there is a connection?

Digitalgrl

FORGOT TO LINK THE STORY: here ya go:


walmart suffers profit drop

and another
yahoo news: walmart suffers profit drop

[edit on 10/01/2004 by DigitalGrl]




posted on Aug, 15 2006 @ 01:20 PM
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That's rather strange... and I have no idea what could have caused it.



posted on Aug, 15 2006 @ 01:22 PM
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well it has something to do with a sale in germany. but with all the talk that is going on, and people pointing to signs of something bad happening, walmart dropping in profit could be seen as one. im no economist though, or wallstreet junkie, so i really have no clue



posted on Aug, 15 2006 @ 01:25 PM
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Originally posted by DigitalGrl
well it has something to do with a sale in germany. but with all the talk that is going on, and people pointing to signs of something bad happening, walmart dropping in profit could be seen as one. im no economist though, or wallstreet junkie, so i really have no clue


true, but companies have ups and downs. Walmart sooner or later has to have a drop in profit, you cant constantly go up, headed towards infinity can you?
We need our economic people to chime in



posted on Aug, 15 2006 @ 01:27 PM
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thats very true lardo, they cant go up forever. and as i said before, i dont think very highly of walmart so i really dont care how much they make. but some people may see it as a sign or indicator of something, which i agree with you again, that we need our wall street junkies and economists to chime in on this one.

Digitalgrl



posted on Aug, 15 2006 @ 01:29 PM
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I was under the impression that we are in a state of "recession"?
with high gas prices and such, this can cause a company to lose profit because consumers are not traveling or venturing out that much.



posted on Aug, 15 2006 @ 01:37 PM
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My future sis-in-law works for them. She said no suprise. They supposedly sold it to the Iranians, is what she heard instore.



posted on Aug, 15 2006 @ 01:38 PM
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yea i dont know. the article doesnt mention that the drop has anything to do with that at least not that i read.


we need some economic people to get in here and help us out lol


digitalgrl



posted on Aug, 15 2006 @ 07:48 PM
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First a company doesn't “feel” anything. A company consists of employees, management and stockholders. A company exists to return maximum profit to share holders, and that it. Anything else they do whether good or bad, they do to serve that primary and singular goal. If they offer better wages or benefits, they do so only to secure more productive employees so as to maximize profit.

So when you wish them ill, you're really wishing ill upon the employees and stockholders. A lot of the stockholders are pensioners who rely on their pensions or investments to supply them income in retirement. Others are younger who have Wal Mart stock in their 401k and need a decent return so they can be comfortable in retirement. Do you wish those people ill as well?

Ok, with regards to their recent statement. This a one time accounting entry that somewhat offset their profits and reduced per-share earning below prior guidance. Wall Street hates uncertainty and punishes companys that under perform, even a little. I

Additionally, from what I've read, sales are down slightly and Wal Mart cites high gas prices as the reason. High gas prices mean people make fewer trips to thier local Wal Mart. High gas prices raise transportation costs and serve to cut into their margin. High gas prices will knock a bit of growth, but since we get about twice as much GDP per BBL of oil than in the 70's, nothing bad is going to happen.

So Wal Mart had one qtr of lower than predicted profits, but since Wal Mart is one of the best run companies in human history, they'll be fine.



posted on Aug, 15 2006 @ 08:14 PM
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Originally posted by lardo5150
I was under the impression that we are in a state of "recession"?
with high gas prices and such, this can cause a company to lose profit because consumers are not traveling or venturing out that much.


Our economy is in a wierd situation..

Gas prices are up true.. and inflation (no matter what the fed says) is out of control.

We are loosing jobs, both white and blue collar. The fed says they are replaced, that they are creating more jobs then lost since 9/11... however the income has grown, but only for the top richest people in America, and middle income families and the poor are feeling the inflation strain the most.

If jobs are being created they are low wage jobs (no wonder the house failed to pass the minimum wage act huh?) and the only way the fed knows who is unemployed is who applies for assistance, when I am between jobs the fed would never know, because I would never report it. So how bad is unemployment?

Wal mart is not hurt. Wal mart has devestated our civilization, it is a black scorn on our nation, it is the stereo type of what America is to the world who makes fun of us.. it is an embarassment. Long gone are days of ma n pa shops, hand made goods, QUALITY.. now we have china express deliveries to the local Wal Mart, which sadly every little town seems to be scared by one. May their CEO's burn in the eternal pit of agony that awaits such disgusting people


DAMN I hate Wal Mart!!

However their is good news! If we suffer an economic colapse, to rioters will tear down wal marts and loot them first.



posted on Aug, 15 2006 @ 08:25 PM
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Originally posted by lardo5150
I was under the impression that we are in a state of "recession"?
with high gas prices and such, this can cause a company to lose profit because consumers are not traveling or venturing out that much.



In contrast to popular belief, a recession is not correctly defined as a drop in a country’s real Gross Domestic Product (GDP) for two or more successive quarters. Rather, it is a period of simultaneous declines in coincident measures of overall economic activity such as output, income, employment and sales[1]. In fact, the 2001 U.S. recession did not see two successive quarterly declines in real GDP.
en.wikipedia.org...-0


America couldn't be further from a recession, since we've had more than six straight years of economic expansion. Q1 was 5.8% (!) and Q2 came in at 2.5%. What! GROWTH IS SLOWING?!!!

Sustained 6% growth for an industrial economy is inflationary and unsustainable, so a lower Q2 number was good. Look for the Q2 figures to revised to upward when the final numbers come out (my guess: 2.9%). AND Q3 will tell the tale of the tape. If Q3 is around 3% then all is well, if it comes in closer to 2% than a mild recession might be in the cards. Higher fuel prices are a drag on growth, it's just hard to say right now how much a drag it will be.

However June retail sales came in above expectations and the latest wholesale prices number were way below expectations, greatly easing inflation fears. That's why the DOW was up 132 today. It also means the Fed won't raise rates at their next meeting.

If there is a recession (I personally doubt it) you can blame Berneke and the Fed. That last several interest rate hikes were completely unnecessary and harm growth.



posted on Aug, 15 2006 @ 08:52 PM
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Originally posted by Number23
America couldn't be further from a recession/


Actually Im afraid it is and all the numbers and accounting records in the world will not convince me otherwise and here is why.....

I live in middle america...the "heartland" as it is refered to. In the last few years the dollar value has fallen despite claims from the government and financial officers.

Unemployment had risen sharply just following bush taking office (coincidence - it was predicted at that time that the US would enter a recession shortly after clinton left office.) so this puts the time frame between 2000-2002.

high paying jobs are being outsourced from the US like crazy to save a few dollars so stockholders and CEOs have more money. so they can make an extra million dollars a year
by paying foreigners wages americans would scoff at.

These jobs that were outsourced are being replaced by countless service oriented jobs that most pay minium wage. you cannot support a family of 4 or 5 on these kinds of jobs. Even these jobs are being sucked up by waves upon waves of illegal immigrants.

However there is an upside..... middle america provides for most of the social programs and the means by which the elite in america stay on top. Since middle america is buckling under the stress sooner or later there will be elite falling from the top and the poor will get even poorer (sharp increase in crime rates and with less taxable incomes from the working class not alot of money to build prisons to protect the elite) so they, in the end, are going to end up hurting themselves as well from their greed.

I would say the sudden drop in the profit margins of wal-mart is evidence of this.

Also, the war on terror to which I know a number of americans oppose for "ethical" reasons, was probably meant as a temporary means of easing of the economic recession. So when will the war end? simple. The war will end when america has found a way for all classes to begin to grow again.

Cash Rules Everything Arouns Me CREAM! get the money! dolla dolla bill y'all

[edit on 15-8-2006 by XphilesPhan]



posted on Aug, 15 2006 @ 09:31 PM
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Originally posted by XphilesPhan

Originally posted by Number23
America couldn't be further from a recession/


Actually Im afraid it is and all the numbers and accounting records in the world will not convince me otherwise and here is why.....

[edit on 15-8-2006 by XphilesPhan]


I never trust them city folk with thar fancy book learnin'!

Strictly speaking, the last recession began in March of 2000. A full TEN MONTHS before Bush even took office. It's a fact, deal with it. That last recession, though very short and very mild, was mostly Greenspan's fault. He baked in a few too many interest rate hikes. Berneke is doing the same thing now, but growth is still pretty good.

The economy began to grow and continues to grow in the wake of Bush's tax cuts, because tax cuts always work, always. They've worked every time it's tried.

The latest job data show continued growth in employment and rising wages. Again it's a fact deal with it. In that last decade Honda, Toyota, BMW and Mercedes have all open plants in the US. As a portion of GDP manufacturing has remained about stable since 1945. So we haven't been losing manufacturing jobs.

Yes America doesn't make t-shirts or tooth picks anymore, but we do make machine tools, autos, computers, aircraft, satellites, software and vast array high tech stuff. We lead the world in virtually every important technology.

Capitalism requires creative destruction. Sadly, most people see only the destruction, not the creativity.



posted on Aug, 16 2006 @ 09:56 AM
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Originally posted by Number23

Originally posted by lardo5150
I was under the impression that we are in a state of "recession"?
with high gas prices and such, this can cause a company to lose profit because consumers are not traveling or venturing out that much.



In contrast to popular belief, a recession is not correctly defined as a drop in a country’s real Gross Domestic Product (GDP) for two or more successive quarters. Rather, it is a period of simultaneous declines in coincident measures of overall economic activity such as output, income, employment and sales[1]. In fact, the 2001 U.S. recession did not see two successive quarterly declines in real GDP.
en.wikipedia.org...-0


America couldn't be further from a recession, since we've had more than six straight years of economic expansion. Q1 was 5.8% (!) and Q2 came in at 2.5%. What! GROWTH IS SLOWING?!!!

Sustained 6% growth for an industrial economy is inflationary and unsustainable, so a lower Q2 number was good. Look for the Q2 figures to revised to upward when the final numbers come out (my guess: 2.9%). AND Q3 will tell the tale of the tape. If Q3 is around 3% then all is well, if it comes in closer to 2% than a mild recession might be in the cards. Higher fuel prices are a drag on growth, it's just hard to say right now how much a drag it will be.

However June retail sales came in above expectations and the latest wholesale prices number were way below expectations, greatly easing inflation fears. That's why the DOW was up 132 today. It also means the Fed won't raise rates at their next meeting.

If there is a recession (I personally doubt it) you can blame Berneke and the Fed. That last several interest rate hikes were completely unnecessary and harm growth.



'

Don't be so cavalier, Number23.

In fact, many very bright financial minds feel we're on the precipise of a recession.

First, I believe GDP growth last quarter of 2.5%. I think 2.2% was due to the housing industry. We all know that housing is undergowing a contraction, or at least a slowdown. So assume housing drops to zero, that means our GDP, theorhetically, can drop to .3% -- very close to recession (meaning GDP flattens or actually reverses).

So with such a slight margin of .3%, it wouldn't take much else to tip the scale to the negative.

That being said, perhaps the biggest indicator of a coming recession is our inverted yield curve. Basically an inverted yield is when the return on a 10-year or more treasury rate is actually less than short-term treasury rate returns (short-term generally defined as 2 years or less).

Common investing sense dictates that the longer you loan someone your money, the more you should see a return. For example, if I give the government $1,000 for 30 years, I should get a heaftier return for that money than if I loaned the same amount for only say 2 years.

But throughout our economic history there have been instances where the opposite occurred, i.e. the inverted yield curve. And each and every time they have occurred, we've slumped into recessions (anyone remember the 2-month inverted yield just as the tech bubble burst during 2000?).

We've been in that state for the past six months. So by that dictate alone, I feel recession is upon us.



posted on Aug, 16 2006 @ 10:24 AM
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Originally posted by behindthescenes
'

Don't be so cavalier, Number23.

In fact, many very bright financial minds feel we're on the precipise of a recession.

First, I believe GDP growth last quarter of 2.5%. I think 2.2% was due to the housing industry. We all know that housing is undergowing a contraction, or at least a slowdown. So assume housing drops to zero, that means our GDP, theorhetically, can drop to .3% -- very close to recession (meaning GDP flattens or actually reverses).

So with such a slight margin of .3%, it wouldn't take much else to tip the scale to the negative.

That being said, perhaps the biggest indicator of a coming recession is our inverted yield curve. Basically an inverted yield is when the return on a 10-year or more treasury rate is actually less than short-term treasury rate returns (short-term generally defined as 2 years or less).

Common investing sense dictates that the longer you loan someone your money, the more you should see a return. For example, if I give the government $1,000 for 30 years, I should get a heaftier return for that money than if I loaned the same amount for only say 2 years.

But throughout our economic history there have been instances where the opposite occurred, i.e. the inverted yield curve. And each and every time they have occurred, we've slumped into recessions (anyone remember the 2-month inverted yield just as the tech bubble burst during 2000?).

We've been in that state for the past six months. So by that dictate alone, I feel recession is upon us.



The number I've see show a 3 month treasury paying 4.85%, A 5 year paying 4.70% and a 30 year paying just under 5%. That looks like a flat curve to me. So mild recession is possible (it's always possible) but today's CPI numbers were pretty nice (the markes are liking it) so I still think things will be ok.

The Fed went a bit too far with raising rates, but growth and employment are still pretty darn good.



posted on Aug, 16 2006 @ 12:15 PM
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The number I've see show a 3 month treasury paying 4.85%, A 5 year paying 4.70% and a 30 year paying just under 5%. That looks like a flat curve to me. So mild recession is possible (it's always possible) but today's CPI numbers were pretty nice (the markes are liking it) so I still think things will be ok.

The Fed went a bit too far with raising rates, but growth and employment are still pretty darn good.


I haven't checked this week. So the curve is flattening? Probably due to the Fed pausing on the rate hike.

That being said, the housing start numbers were bitter poor today. This only feeds my speculation that the housing bubble has finally popped. That's not to say that every market in the U.S. will feel the same pain. The levels of declining prices, pestering oversupplies and cooling demand will be proportional to just how hot a particular market was during the boom times.

The real problem will be in 2 areas: oversupply -- which will hammer resale prices as new product continues to compete with older supply -- and mortgages, particularly the risky interest only's. So many buyers did the five-year interest only loans in order to reach a threshold to buy a house they probably can't afford in normal times, mainly due to the historically crazy run-up in pricing.

Thinking that they would build up equity during that time -- never considering that, hey, equity is a two way street, and can contract just as easily -- they would simply refi later at a fixed rate.

Except fixed rates are now above 6%, and for some -- with no or even dreadfully negative equity built into their homes -- they will be priced out of their own homes, and will be forced to sell. Assuming they can't afford the new price plus principle monthly payment, and if they can't sell within a reasonable timeframe, foreclosure becomes the only option.

So suddenly an already oversupply problem becomes exaserbated by bank foreclosures hitting the market, where the bank is solely concerned with flipping the home for whatever they can get, just to erase it from their books.

This, my friends, is what a deflating housing bubble looks like. And this is what will drain us into a recession.

The only saving grace right now was the Fed rate pause.



posted on Aug, 16 2006 @ 12:30 PM
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I'm currently a marketing consultant and previously spent a significant number of years with some very large ad agencies at the senior executive level. One thing we know from experience is that our business goes flat long before the economy falters. Although it makes poor business sense, most companies cut-back their marketing when they feel serious economic pressure. Well that started happening in earnest last year and has increased exponentially over the last several months. Virtually all of the people I know in this industry are reporting the same thing, especially those with retail clients. It's not showing up in the numbers yet and God knows there is NO way the administration is going to own up to it. Especially with elections right around the corner. In the Northeast restaurants have reported their worst year-to-date in recent history, the real estate market is all but dead, car sales are in the toilet, large 'box' goods (furniture and such) are off by 25%+. Things are looking very grim indeed. I'm going to personally predict that this holiday season's retail sales will be among the worst in history. You can count on it.



posted on Aug, 16 2006 @ 12:37 PM
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Originally posted by behindthescenes

I haven't checked this week. So the curve is flattening? Probably due to the Fed pausing on the rate hike.

That being said, the housing start numbers were bitter poor today. This only feeds my speculation that the housing bubble has finally popped. That's not to say that every market in the U.S. will feel the same pain. The levels of declining prices, pestering oversupplies and cooling demand will be proportional to just how hot a particular market was during the boom times.




Well that's another argument. Home sales are slowing down, but it's a long, long way from a CRASH. Median prices in a lot of markets still continue to rise, although not as fast.

Having recently left the housing market with $300K in profit, I'm rooting for a bit of crash so I can get something nice in Palm Beach, FL. We'll see, but I don't think Palm Beach property will dropping much, if at all.

[edit on 16-8-2006 by Number23]



posted on Aug, 16 2006 @ 12:53 PM
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You know it's really not as great as you might think, being right all the time...
In truth, I'm not *always* right, just nearly always.



DALLAS (Reuters) - Inflation is still the greatest risk to the United States economy, and policy-makers will not hesitate to raise interest rates again if incoming data suggests that is necessary, Federal Reserve Bank of Dallas President Richard Fisher said on Wednesday.

...

He said U.S. gross domestic product growth for the second quarter was likely to be revised closer to 3 percent from its initial print of 2.5 percent, and third-quarter growth could be similar.
(Number23: JUST LIKE I SAID)
news.yahoo.com...






[edit on 16-8-2006 by Number23]



posted on Aug, 16 2006 @ 12:55 PM
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Niiiice....

I've pondered buying investment homes when the distress really hits. But being in Atlanta, the downturn effects haven't hit single-housing as of yet. The condo market? Yes, it's feeling the pain. Right now, that's limited to longer times on the market -- particularly for resales. The supply is ticking up, no thanks in small parts to johnny-come-lately condo tower developers and most recently Donald Trump.

I will agree that retail sales are going to be abysmal this holiday. And by abysmal, I mean off from the astronomically inflated numbers we've seen during the past four years.

There is an interesting alternative expectation in real estate -- the commercial side.
Commercial properties (i.e., office buildings, warehouses, shopping centers, etc) have been selling like gangbusters for the past four years, in many markets with record pricing transactions. And ironically, that's despite a lackluster demand for office and industrial space, on average, for the same period.

Most of the industry insiders expected this investment activity -- fueled by a flood of private equity seeking better than bond-like returns compared to the stock market -- to taper off finally this year. Now we're seeing the foreign influx. One theory has to do with the flight to quality: As tensions in the Mideast and the world rise, foreign investors -- despite the rhetoric heard -- still turn to dolloar-denominated investments as a source for security. So suddenly a new pool of capital is out in the market seeking commercial properties.

That may make current landlords happy, especially if they want to divest out of there.






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