Chapter 15

http://www.theprovince.com/business/fp/down+investors+shed+commodity+stocks/2895873/Mart+faces+squeeze+mixed+economy/2901815/story.html


Summary
Wal-Mart Stores Inc. may find itself in an uncomfortable place in the “new normal” of the U.S. economy, getting squeezed in the middle as some customers trade up while others seek out even lower prices. During the recession, Wal-Mart thrived as consumers cut back their spending to the most basic necessities and sought bargain at stores. However, now that the U.S. economy is recovering, people who held onto their jobs are more willing to shop trendier fashions at department store like Kohl’s Corp and Target Corp. On the other hand, chains like Family Dollar Stores Inc are stocking more food on their shelves, in order to help them win customers that are shopping only for essentials. Moreover, many retailers, including Target and Kohl have posted better-than-expected March same-store sales last week, in the strongest sign yet of revived consumer demand. Even Family Dollar posted better-than-expected quarterly earnings, but Wal-Mart did not report monthly sales and a spokeswoman declined to discuss sales trends. In February, Wal-Mart forecasted first-quarter sales at stores open at least a year would be flat, within a range of up 1% to down 1%. Since the beginning of the year, Wal-Mart shares are up 3%, while Target’s stock has jumped 16% and Family Dollar’s is up 36.3%. The Standard & Poor’s 500 Index is up 7.3% in the same period. Analysts on average expect Wal-Mart to post a 9% increase in first-quarter earnings per share, according to Thomson Reuters. This compares with expectations for Target’s earnings to rise almost 22%, an attractive prospect to some.

Connection
This article connects with Chapter 15.1 about insiders of the company such as owners and its executives, and outsiders such as bankers and investors. This article will definitely be an interest for outsiders such as bankers and investors who want to invest or loan money to Wal-Mart. For instance, if bankers were to loan money to Wal-Mart, they would want to know their ability to pay of the loan and since Wal-Mart, and since, in February, Wal-Mart forecasted their first-quarter sales at stores open at least a year would be flat, within a range of up 1% to down 1%. Bankers would have to rethink about lending them money because as the economy goes up, Wal-Mart would not be a favourable place to consumers to shop and eventually their sales will decrease in time, and as a result loans would be harder to pay. Now, as the investor’s perspective, they would usually look for companies that are growing and profitable. For example, if investors were to look at the three companies to invest: Wal-Mart, Target, Family Dollar’s, and Standard & Poor’s 500 Index they would look at shares, they would look at their shares and stocks. In addition, since all the companies have either increased in their stocks and shares, the investors would have to compare how much each company’s shares and stocks are increased before they make any decisions.

Reflection
In my opinion, Wal-Mart should make some changes to fit the “new” change in the U.S. economy since it’s rising. Now that the economy is getting better, some of the Wal-Mart customers that are economically recovering have gone up-channel and has practically abandoned Wal-Mart for more expensive products. On the other hand, some of the shoppers had suffered significant economic damage had gone down-channel to the dollar stores. However, I am not really concerned for Wal-Mart because for the past year Wal-Mart had a significant name for being cheap and affordable for consumers and there would most definitely be some loyal consumers who will stick with Wal-Mart.