The world's biggest retailer just passed another major landmark: for the first time in history, Wal-Mart raked in sales of more than $100bn in a single three-month period.
The company, which began life as a single discount store in Arkansas in 1962 and now has more than 7,100 outlets in 14 countries, trumpeted its record quarterly results yesterday, beating Wall Street's forecasts even as it predicted a tougher year to come.
The shares, though, reacted positively – as indeed they have done since Wal-Mart promised a return to its discounting roots lasts summer.
Now, not only is it defying predictions of a consumer slowdown, but the company is positioning itself as the answer to the woes of the US and to the global economy.
On the same day that Congress was talking about a $168bn fiscal stimulus plan that will hand tax rebates to consumers and tax breaks to corporations, Wal-Mart cheekily announced a "fiscal stimulus package" of its own, promising to cut prices on a wide range of basic products.
Tongues may have been in cheek, but it was making a point that, it is clear from the figures yesterday, is resonating again with consumers who are struggling to meet higher mortgage bills, fuel costs and food prices. The higher-ups at Wal-Mart are fond of quoting the company's late founder, Sam Walton, and one of his dictums that has been resurrected lately is this: "We'll lower the cost of living for everyone, not just in America, but we'll give the world an opportunity to see what it's like to save and have a better lifestyle, a better life for all."
It is all coming together at once – there is a sales growth of almost 20 per cent in Wal-Mart's expanding international operations, and a recovery from the mis-steps of the past couple of years in the US. Worried that the company had reached saturation point in the US, Lee Scott, the company's chief executive, began an ill-fated push upmarket in new Wal-Mart stores, trying to lure more affluent customers with posher wine selections and a womenswear collection that he advertised in Vogue magazine. That message was scrapped as the company's blue-collar customer base became confused, and with an economic downturn looming.
"The company has been executing on initiatives aimed at cleaning up stores and improving merchandising, which in combination with a strong price message to the consumer, positions it well in an environment where the consumer is looking for a superior-value proposition," Jefferies analyst Dan Pinder told clients. "Further, Wal-Mart is one of the few retailers that saw a benefit from tax rebate checks during the last cycle's fiscal stimulus package, so it seems reasonable that it will benefit again later this year."
Wal-Mart's global revenues in the three months up to 31 January were $106.3bn, up by 8 per cent on the same period a year ago and giving an annual sales total of $374.5bn for the accounting year just ended. Fourth-quarter profit was $4.1bn, which was up from $3.9bn.
"For the fourth quarter, we topped $100bn in sales, the first time in history that any retailer has reached this milestone in a single quarter," said Mr Scott. "The price leadership strategy we put in place at the beginning of the year was exactly the right strategy for our customers around the world in a tough economic environment. We know that the economy remains a critical factor in this new fiscal year. Customers were more cautious in their spending in January. In a volatile economy, I believe we are well positioned to succeed."
We are in front line of inflation battle, says Asda chief
Asda, the European bridgehead of the Wal-Mart empire, has promised to help the Bank of England in its battle against inflation, with a new round of price cuts on everyday items in the next few months.
"This will be a tougher year for consumers, with increasing energy costs and inflationary pressures on core items, and we, along with other retailers, have a responsibility to keep a lid on inflation," said Andy Bond, Asda's chief executive. "We will be aggressively rolling back prices by focusing on reducing our costs. We will also be challenging our suppliers to do the same. Together we must ensure we make it as easy as possible for hard-pressed shoppers to make ends meet."
Mr Bond was speaking as Asda reported what it said were above-target financial results for the financial year ended 31 January, and said it was maintaining like-for-like sales growth in the "mid-single digit"percentage range in 2008 so far.
Asda, purchased by Wal-Mart in 1999, grew its market share in the UK last year, and split a £21m Christmas bonus pool among its 127,000 store and depotemployees.