Walmart’s Q3 2012 Results – Comments

I found various notable items in Walmart’s Q3 conference call transcript (pdf) dated November 15, 2011.  I view Walmart’s results and comments as particularly noteworthy given their retail prominence and focus on low prices.  I have previously commented on their quarterly results; these previous posts are found under the “paycheck to paycheck” label.

Here are various excerpts that I find most notable:

comments from Mike Duke, page 7:

While we feel good about the progress in our stores, our customers remain concerned about jobs, and only one in 10 Walmart Moms that we surveyed view the state of the U.S. economy as good.  They want to save money. They’re juggling credit cards, using coupons, and skipping restaurants and vacations. There is a real sense that the economic strain is taking its toll.

from Bill Simon, page 14:

Economic conditions in the third quarter remained largely unchanged.  Our core customer was still impacted by high unemployment and continued uncertainty over the economy, leading to declining consumer confidence. Although they remained higher than a year ago, gas prices, which positively affect customer trips, moderated during the quarter.

from Bill Simon, page 14:

Rising food costs continue to be a major concern for customers. We hear from some shoppers that they believe it will be more difficult than ever to afford holiday meals for their families.

from Bill Simon, page 14:

As others in the industry reported, customers continue to see food prices rise in key categories, such as produce, dairy and meat. Walmart continues to invest in absorbing some of these increases to ensure price leadership in our markets. During the quarter, grocery inflation was approximately 4 percent, in line with what’s been seen throughout the industry. But given our price investment, the impact to our customers was substantially less.

from Bill Simon, page 16:

Customer feedback on the return of layaway has been overwhelmingly positive and layaway transaction volume continues to exceed plan. Our customers tell us that they appreciate that we’ve brought back this service, and it’s a great way to help families on a tight budget shop for Christmas. As a reminder, we’ve added service fees to reduce layaway cancellations in the fourth quarter.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1247.72 as this post is written