11/14/2005

Wal-Mart continues to improve its profits

Despite natural disasters that have occured throughout the nation, and even having countless stores shut down because of the disasters, Wal-Mart has pulled through, making a 3.8% increase in profits, according to this Wal-Mart article. While the holiday season is approaching, and Wal-Mart is hoping to capitalize handsomely, they are also trying to focus on the emergence of some of their new products, including stylish clothing, and home electronics. I think this is smart, because while nearly all companies expect their sales to boom during the holidays, it is important to constantly seek out new ways to keep a hold in the market place. In the case of Wal-Mart, perhaps they haven't been as known for their sleek clothing, or quality technological products, but who's to say that won't change? Wal-Mart has made billions because of their marketing genius in offering low prices, and supplier bargaining power, and I believe that they have the potential to propel to an even higher place in the market with their continued focus on clothing, and electronics.

5 comments:

Nate said...

Wal-Mart seems to always make the right moves. In a time where natural disasters have changed so many things, Wal-Mart continues to go forth and continually improve their strategy and make profits. Congratulations to them on being a profitable business.

Jasmine said...

I am sure that Wal-Mart is going to receive a lot of crap from the media, just like the oil companies, for being profitable in a time of disaster. While is an extraordinary business that is a master of it's craft. I personally like Wal-Mart and the money I save by shopping there. I am sure that make even more money during the holiday season.

Dr. Tufte said...

-1 on Morgan's post for a mixed metaphor.

Note that Wal-Mart's rate of profit growth (which is in nominal terms) is less than the nominal rate of growth of the economy as a whole (about 7%). So, in some sense, Wal-Mart is actually underperforming. And yet people criticize them for being greedy - but I guess they don't like to think about facts.

Matthew said...

Dr. Tufte said that Wal-Mart's profit growth has grown less than the economy as a whole (at the time this was written, in 2005). As I am writing in 2008, Wal-Mart is doing quite well. One of the differences is that the economy in 2008 is not as good as it was in 2005. Does this mean that Wal-Mart is somewhat of an inferior good, or at least not a luxury good?

Dr. Tufte said...

Yes, and there is another post somewhere about Wal-Mart being inferior.

The concept you are really looking for though is counter-cyclical: doing better when the business cycle is worse.