Wal-Mart Is Full of Gas

august 17, 2005

Wal-Mart's CEO, Lee Scott, said on their quartly earnings call that Wal-Mart's not doing so well because of high gas prices. The analysts are having a field day with this. As James Cramer points out, "Funny, I believe it costs the same amount to drive to a Lowe's or a Home Depot that it does to drive to a Wal-Mart, but those other guys weren't moaning or pointing fingers at the pump." This time the analysts maybe right when the point out that "competition such as Target, Costco , or BJ's Wholesale Club for [Wal-Mart's] easing growth." This isn't the first time that Wal-Mart has used high oil prices as an escuse for lower than predicted performance and it isn't the first time that Wal-Mart has predicted better than it could achieve -- only to blame something and then predict that it'll get stronger next quarter (to which it does not). "They have to be kidding us at Wal-Mart. They are doing it again. Once again, Wal-Mart reports a disappointing quarter and then once again, it says that the earnings in the future will increase 'at a stronger pace.' Do you know how many times Wal-Mart has played this game? Do you know how many times Wal-Mart has said that things are going to get better after reporting a disappointing quarter?...It has to stop assuming that things will have to get better just because they always have, because, frankly, for the last five years, they haven't." Both analysts have come to the same conclusion about why Wal-Mart is flailing around: The shopping experience at the stores suck and "low prices" is not enough to bring people in. "[S]hopping at my local Wal-Mart is a nightmare, and one I don't relive very often..." and "Wal-Mart simply isn't a fun place to go, and that lowest price isn't the only driver anymore." Maybe, Wal-Mart can take a chance and reflect on why they truly aren't growing as fast as the predict -- looking at other retail outlets, the reason is not gas.

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