Tags: Wal-Mart | Revenue | Stock | Retail

Wal-Mart Revenue Miss Is the Big Story

Wal-Mart Revenue Miss Is the Big Story

By    |   Thursday, 15 October 2015 11:58 AM

Wal-Mart is the largest retailer in the world with revenue of $485 billion in the past twelve months. On Wednesday the company’s CEO warned that earnings would be significantly lower than expected. The stock price plunged on that news.

An earnings drop for Wal-Mart isn’t surprising given the company’s push to raise wages and expand. Wal-Mart had admitted increased labor costs would hurt profits months ago. In updating guidance for the year, Wal-Mart lowered their revenue forecast for 2015. This is perhaps the most important piece of news out of the company.

As the world’s largest retailer, Wal-Mart’s sales offer insights into the broader economy. If WMT’s sales are dropping, it could be a sign that its customers are struggling financially and spending less.  Given the size of the Wal-Mart, practically everyone is a customer. This means slowing sales could be a sign the economy is slowing.

Wal-Mart is just the latest warning sign that something is wrong in the economy. Investors should stop ignoring the warnings signs and start planning for a recession. In a recession, stock markets decline. Usually bonds show gains because the Fed cuts interest rates. This time is different since rates can’t be cut. Without gains in bonds, many diversified portfolios will suffer larger than expected losses, forcing them to sell to raise cash and accelerating the bear markets.

This time really is different – Wal-Mart has stopped growing and the Fed seems to be out of ideas. Investors need to prepare now or expect large losses in the near future.

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MichaelCarr
Wal-Mart is the largest retailer in the world with revenue of $485 billion in the past twelve months. On Wednesday the company's CEO warned that earnings would be significantly lower than expected. The stock price plunged on that news.
Wal-Mart, Revenue, Stock, Retail
256
2015-58-15
Thursday, 15 October 2015 11:58 AM
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