Walmart is a Proxy for Global Economy Now

Walmart has always been bigger than however many stores the chain happened to have, or its customer count or employee rolls. America’s best-known retailer invariably has been a sort of reflection on the country itself — and, now, on the world.

That’s why it can’t be too surprising that Wal-Mart corporate's latest financial results were disappointing to its American execs and investors. Same-store sales in the US fell by 1.8% during the quarter ended January 28 after CEO Mike Duke had said at the beginning of the period that US sales for the quarter would come out “positive.”

It shouldn't come as a shock that Walmart has been performing relatively better overseas these days.

While non-U.S. revenues are only about one-third of Walmart’s sales, it’s in foreign markets such as South Africa — where Walmart is bidding to become a big player by taking over a major local discounter — that the chain’s energy has been going lately. Many parts of the world are recovering more quickly than the United States as well.

There's also the increasing likelihood that Walmart finally will be able to open a flagship location in New York City, like any other retailer is free to do. But where Walmart already has stores across the United States, the company continues to deal with a double whammy.

One part is the chain’s ill-fated decision a few years ago to dilute its well-established brand by going upscale, a move that netted relatively few well-off consumers and only confused and alienated the lower- and middle-class shoppers who had come to count on what Walmart always stood for. Management has spent much of the last year or so scrambling to reverse that huge mistake, and they haven’t completely overcome it.

The other problem for Walmart is one over which it has no control: The typical American consumer is still financially numbed by the Great Recession and the aftermath. Nine-percent unemployment leaves too many of them still feeling insecure and not in a spending mood. Higher gasoline prices don’t help. And to the extent that they are trying to improve their financial lot, many are spending more conservatively – and saving more of their income.

So Walmart’s results might disappoint internally and externally yet for some quarters to come. And Duke might have to start lowballing his prognostications.