business news in context, analysis with attitude

From the Wall Street Journal:

"Walmart Inc. warned that higher prices for food and fuel are causing consumers to pull back, hurting the retail giant’s profits for the current quarter and fiscal year.

"The company, which warned in May that it was stuck with too much unsold goods, said it was having to cut prices to reduce merchandise levels at its flagship chain and Sam’s Club warehouse chain, which would crimp its profits … Walmart said higher prices for food and fuel have hurt sales of general merchandise, especially apparel, which generate higher profit margins for the company.

"Overall, the company expects comparable store sales, excluding fuel, for its Walmart U.S. division to rise 6% in the second quarter from a year ago, but the growth is coming from less profitable items. The company is slated to give its full second-quarter report Aug. 16."

KC's View:

The question is not the degree to which Walmart is knocked down by current economic conditions … it is the degree to which it can adjust and react to new realities.

This is where Walmart will move to steal market share … on the premise that higher sales and profits will come.