Wal Mart Lowers Profit Expectations and Highlights Recession Shift in Consumer Behavior

A key metric in the data released by Wal Mart is not their upfront sales and profit. The recessionary KPI (key performance indicator) is a significant increase in same store sales of 6% (excluding fuel), yet the outcome of that increase in customers is a decrease in profit because the purchases are food.

[Keep an eye on this and we will likely see a similar increase in foot traffic at Aldis]

(VIA NBC) […] Walmart, which is the biggest grocer in the U.S. and often considered a bellwether for the overall economy, said more customers are turning to its stores, which are known for low prices, to fill their pantries and fridges. But they are skipping over general merchandise that they can live without.

Walmart said it now expects same-store sales in the U.S. to rise by about 6% in the second quarter, excluding fuel, as customers buy more food at its stores. That’s higher than the 4% to 5% increase that the company previously expected.  However, that merchandise mix will weigh on the company. Groceries have lower profit margins than discretionary items, such as TVs and clothing.

“The increasing levels of food and fuel inflation are affecting how customers spend, and while we’ve made good progress clearing hardline categories, apparel in Walmart U.S. is requiring more markdown dollars,” CEO Doug McMillon said in a news release.  (read more)

Discretionary spending is gone.  Blue-collar and white-collar middle-class consumers are in a financial hunker down mode.  We will see several tiers of socioeconomic strata start to shift down now.  Stores like Trader Joe’s and Whole Foods will become more of a luxury and indulgence.

Consumer confidence continues to drop:

(The Hill) – Consumer confidence slipped for the third straight month in July as sky-high prices dampened demand for products and services, according to a new survey.

The Conference Board’s consumer confidence index, which tracks consumer attitudes and buying intentions, dropped from 98.4 percent last month to 95.7 percent in July, its lowest level since last year. (read more)

As the economic situation continues to unfold, new terminology will be adopted to hide and disguise reality.  As we have just witnessed the White House redefine “recession” so too will they redefine “unemployment” to something like “transitional workers.”

We can expect to see government officials say something akin to, “our transitional workforce may expand for some time as our economy shifts.”  Meaning unemployment may rise as the Green New Deal is implemented by executive fiat.  This is how they operate.

We are in an era of great pretending. [ GO DEEP ] That is our problem. It’s not just what they are doing, it is our willingness to pretend they are not doing it.  As long as denial remains a survival mechanism, because acceptance is just too painful to admit, no corrective action is possible.

Our economy is being intentionally guided into a declining status in order to bring forth the “transition” they desire.