The News Courier in Athens, Alabama

Lifestyle

November 15, 2012

Wal-Mart and Target: A tale of 2 discounters

(Continued)

Even the tone the retailers struck on Thursday was different. Charles Holley, Wal-Mart's chief financial officer, told reporters during a call on that the retailer's consumers are still worried about high unemployment and higher basic costs like gas. He said he worries that they also have some anxiety over big tax increases and spending cuts — known as the "fiscal cliff" — that will take effect in January unless Congress and the White House reach a budget deal by then.

"Macroeconomic conditions continue to pressure our customers," Holley said.

Meanwhile, Gregg Steinhafel, chairman and president of Target, told investors: "We feel good about our ability to deliver inspiring merchandise, most-wanted gifts, and unbeatable value, while also generating expected profitability."

The fortunes of the two retailers have changed during the economic downturn. In fact, throughout most of it, Target and Wal-Mart have played a bit of musical chairs.

Wal-Mart at first fared well during the downturn as affluent shoppers traded down to its stores. But the company eventually began to lose some of its core low-income shoppers in the process.

The company, based in Bentonville, Ark., posted nine consecutive quarters of revenue declines in its U.S. namesake business as it moved away from its lowest prices strategy and got rid of thousands of basic items its core customers covet in an overzealous effort to de-clutter the stores.

Wal-Mart's namesake U.S. business, which began to re-emphasize low prices and restocked shelves, reversed the decline last year. The business has recorded five consecutive quarters of gains in revenue at stores open at least a year, an indicator of a retailer's health.

But its momentum has slowed. Wal-Mart said Thursday that its namesake U.S. business had a 1.5 percent increase in revenue at stores open at least a year. That gain is short of the 1.8 percent increase Wall Street expected. It's also a slowdown in growth from the 2.2 percent gain the business posted in the second quarter and the 2.6 percent increase it had in the first quarter.

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