Wal-Mart Joins Amazon in Squeezing Retail Rivals
Wal-Mart’s strong quarter may represent less of a bellwether for other retailers than a tolling bell
The retailing giant on Thursday said its overall sales in its fiscal first quarter ended April rose 0.9% from a year ago to $115.9 billion—well above the $113.2 billion analysts anticipated. Earnings per share, at 98 cents, were a dime better than estimates.
After a string of disappointing results from retailers including Target, TGT 2.24 % J.C. Penney JCP 0.66 % and Macy’s, M 0.96 % the Wal-Mart numbers were a shot in the arm. Its stock climbed, with other retailers’ shares showing sympathy gains.
But Wal-Mart’s first-quarter success may not reflect a better retailing environment than investors have lately been reckoning on. Rather it could signal a renewed willingness on Wal-Mart’s part to take back market share, even if it comes at the expense of slimmer profit margins.
The payoff from those investments are better experiences for customers, a more robust online presence and—as the first-quarter results show evidence of—better sales. For anybody looking for a way to handle the challenges of e-commerce share gains and shifting consumer attitudes, Wal-Mart may have put together a convincing playbook.
Retailers have cut costs as a result, but that is often damaged the shopping experience—driving customers away. If Wal-Mart is now giving people a more compelling reason to shop at its stores, it is also giving them a reason not to shop elsewhere.
Retailers who had gone from looking over their shoulders for Wal-Mart, to looking over their shoulders for Amazon.com AMZN 0.61 % may have a reason to worry about the Bentonville, Ark., behemoth all over again.
Write to Justin Lahart at email@example.com