Shares of Wal-Mart are sliding in the pre-market after mediocre earnings.
While the company managed to surpass expectations on the earnings line, revenue of $166 billion was $1 billion shy of expectations.
Worse, the company’s earnings estimates for the coming quarter of $0.91 to $0.96 is below existing expectations of $0.96.
Comp store sales in the US were down 1.1% for the quarter, if you exclude fuel sales.
This line from CEO Mike Duke is ominous: “Some of the pricing and merchandising issues in Walmart ran deeper than we initially expected, and they require a response that will take time to see results… There is no greater priority for Bill or me than getting sales back into positive territory. “
This stage of the cycle for Wal-Mart is ugly: The higher-end buyers who became Wal-Mart customers during the crisis have gone back to higher-end shopping. Conversely, the low-end buyers haven’t seen much of a recovery yet.
This chart of Wal-Mart vs. the S&P gives a nice long-term look at how badly this company has underperformed the rest of the market.