Wal-Mart and the Baked Beans Economy

By Patrick Watson

Thursday the Commerce Department reported an unexpected decline in retail sales for July. Remarkably, it appears that people who do not have jobs spend less money, and retailers lose sales as the number of such people grows. Why this surprises anyone is unclear.

For those who do have money, one of the more popular places to spend it is Wal-Mart (WMT), which confounded Wall Street once again with unexpected profits. (By the way, I am sorry to use the word “unexpected” so much. The fact that I must do so should tell you something about the ability of the analysts who set these expectations.)

Anyway, Wal-Mart (WMT) had larger profits but smaller revenues for the quarter. The Bloomberg story contained the following very odd sentence:

“The chain also attracted more customers, helped by price reductions on its Sam’s Choice Black Angus beef patties, baked beans and flat- panel televisions to lure consumers grappling with shrinking paychecks and the worst unemployment since the Great Depression.”

There’s the real story in eight short words: beef patties, baked beans and flat-panel televisions. This is what we’re all buying now, apparently. Americans are nothing if not practical. Football season is approaching quickly and Wal-Mart is mercifully giving us a chance to prepare at a bargain price.

The reality is that we can’t postpone reality forever, yet many of us are still trying.

Disclosure: No position

Comments

[ebworthen:]

LOL

Well done, nice sarcasm.

Baked beans, yes.

It's Summer after all, you need to get some beef patties to make the most of what is left of barbeque season.

Baked beans are cheap and filling.

You need a flat panel for football instead of that bender to Vegas, and so you can watch CNBC report on "Crash II" come October when we revisit "666" on the S & P.

Aug 14 10:42 AM

[EddieTa:]

Wal-Mart is starting to do well overseas as well, per today's WSJ.

Aug 14 12:27 PM

[Ransome:]

The food prices at Walmarts are dropping and they are expanding the store brand for value shoppers. This is tricky business. Korvette's offered brand name goods at discount prices but went under when the quality of the store brand became crap and eventually the store brand was all they offered.

Aug 14 02:36 PM

[W.E. Heasley:]

Good article.

Possibly and “unexpectedly” the Nat. Gas Glut could be related to the Baked Beans mentioned in the article.

This theory, The Beanie Weenie Theory aka Blazing Saddles Campfire Theory, works as follows:

(1) increased demand in baked beans creates hyper stimulation,

(2) this hyper stimulation creates known-knowns, known-unknowns, and unknown-unknowns,

(3) a cascading unintended-consequence... ensues,

(4) an over supply of unwanted Natural Gas is the outcome.


The Council of Economic Advisors have immediately commented that “Saved Beans” was clearly an effect of the Porker Stimulus Plan.

Private Sector Economists immediately pointed out “Saved Beans” is not a statistic. You are either an “Eaten Bean or an “Uneaten Bean“, but no “Saved Beans”.

Aug 15 12:05 PM

[buoy:]

Walmart grocery has been eliminating selection and re-focusing on their "Great Value" generic store brand. Seems they have had a change of marketing strategy. Not sure that will keep new found shoppers when economy improves.

Aug 15 04:00 PM

[LKofEnglish:]

wal-mart has its own trucking operation which is a HUGE money pit. they can and are saving money by starting to outsource this monster to the likes of Swift, et al. Swift for those who don't know is owned pretty much by morgan stanley now which took to company private in one of the worst LBO's in history (for the buyer who had been a billionaire when he took his company public took a bath on his need to "be the owner" again.) should this economy really recover a public offering of swift (which is the largest trucking company in the world) by Morgan Stanley could net the finanical services company a fortune. swift is the low cost leader in the industry, the "postal service of trucking" if you will with a hugely profitable niche in long haul trucking. with the rise in energy prices commensurate with the fall in orders swift is shaping up to be the only game in town as all the independents simply go belly up. creating a monopoly in the trucking industry is a capitalists wet dream especially if combined with social unrest and/or an overall collapse in federal authority which i believe is as inevitible as a coming hyper inflation. in short if you want any of your goods moved you'll be forced to pay a premium to a company like swift since they are the only company big enough and with a large enough work force to move your goods without disruption. i think trading profits are the order the day for wal mart since a revenue decline by the world's largest grocer says defensive plays during "great depression II" have played out for the time being. in the meantime trucking companies which have been completely obliterated by the recession and the rise in oil prices have much to gain should this economy suddenly register positive growth numbers, especially if unemployment stays high and the "jobless recovery" becomes a reality since the turnover rate for trucking companies' employees is typically in excess of 100%.

Aug 15 05:23 PM