Today's happy-happy-joy-joy retail news is headlining the surprise gain in Wal-Mart's same-store sales. A coupla percent gain, 2.4%, to be precise, wouldn't be news at a lot of other outfits, but when you're as big as Wal-Mart, little things become big things.
But what does it really mean beyond Wal-Mart?
I've long had a suspicion that Wal-Mart isn't a good barometer of overall economic demand from consumers, as some imply. Instead, I see it as something of a contrary indicator -- it sure seems to have operated as one over the past few years, at least. As consumers have opened up their wallets to drive record results and focused retailers like Best Buy
Now that gas prices are going through the roof and the home-loan ATM is shutting down, does the return to prominence at Wal-Mart signal something good about the U.S. economy? Are consumers more resilient and spendy than we thought?
My first thought is "no way." In my vast experience as a cheapskate, I've found that people seem more likely to shop at Wal-Mart when they feel pinched financially, and they're willing to put up with the crammed, zoo-like stores just to save a few bucks. People who feel affluent, I think, head further upscale, whether that's Target, or a trip to the mall to blow a few bucks at Urban Outfitters
Wal-Mart's latest results highlighted success in groceries, which would seem to lend some support to the pressured consumer hypothesis. Honestly, who goes to Wal-Mart for food, other than those who feel the need to make a single trip to a single store? But strangely enough, if we want to go with a "sky is falling" thesis, there's a fly in our ointment. Electronics and other discretionary gadgets also did well, though that seems to be based on a bump from the arrival of computers from Dell
In other words, I think good news for Wal-Mart signals bad news for the economy, and probably for many other retailers. It's been a heck of a party, but if people are swapping caviar for Cheez Whiz, I think the good times may be winding down.
Or maybe, just maybe, this is too much navel-staring for a single short sales call. Sometimes a cigar is just a cigar, and if you get it from Wal-Mart, it's going to be a cheap one. Perhaps a decent month's comps for Wal-Mart may be just as mundane.
For more on the 800-lb. gorilla of retailing, check out:
Comments? Bring them here.
At the time of publication, Seth Jayson had no positions in any company here, but he thinks Dell's merchandise will fit in nicely at Wal-Mart. Dell, Wal-Mart, and Gap are Motley Fool Inside Value recommendations. Whole Foods is a Stock Advisor pick, as are Dell and Gap. See Seth's latest blog commentary here. View his stock holdings and Fool profile here. Fool rules are here.