Wal-Mart's fourth-quarter net income surged 23.7%, to $4.7 billion, or $1.21 per share. Revenue increased 4.6%, to $112.8 billion. But the big, thought-provoking bummer in Wal-Mart's message was its 1.6% drop in U.S. same-store sales (not including fuel). In fairness, the company faced a tough comparison to last year's 2.4% comps increase. Just like last quarter, Wal-Mart blamed price deflation in food and electronics for its sluggish performance.
Still, Wal-Mart's lackluster numbers raise several grim questions. Are its traditional core customers currently suffering so much they can't buy as much as they used to? And if some budget-conscious consumers traded down to Wal-Mart last year, are many feeling better now, and moving back up to higher-end retailers?
Worse yet, this performance occurred during the holiday shopping season, when Wal-Mart boldly launched multiple price wars against rivals such as Target
Even Wal-Mart's 2010 guidance disappointed; the company expects just a 5%-8% increase in earnings. In contrast, yesterday's quarterly results from Whole Foods Market
Investors shouldn't give up on the Bentonville Behemoth quite yet. The consumer climate remains weak, with unemployment high and many companies still announcing layoffs. Meanwhile, master investor Warren Buffett of Berkshire Hathaway
I doubt it's wise to count Wal-Mart out as a defensive stock in an uncertain climate. The company returned some $11.5 billion to shareholders in the just-completed fiscal year, and reaffirmed its commitment to share repurchases.
Has Wal-Mart's recessionary advantage eroded? Or is this a great time to buy the stock? What's your outlook for consumers and retail in general? Sound off in the comment boxes below.
Stock up on related Foolishness:
Wal-Mart Berkshire Hathaway, and Costco are Motley Fool Inside Value picks. Berkshire Hathaway, Costco, and Whole Foods Market are Stock Advisor recommendations. The Fool owns shares of Berkshire Hathaway and Costco. Try any of our Foolish newsletters today, free for 30 days.