Increase In Spending Doesn’t Help Wal-Mart Stores, Inc. (NYSE:WMT)

Posted by Chris Bell December 27, 2013 0 Comment 1237 views

Wal-Mart Stores, Inc. (NYSE:WMT)’s stock has not delivered fascinating returns year to date and its previous close of $78.39 was approximately 19.2% above its 52 week low of $65.75. However amid the better than expected sales estimates during 2013 holiday season could boost the price of this retail giant as we approach 2014.

Encouraging Consumer Spending

Mastercard Inc. (NYSE:MA)’s SpendingPulse report reveals 2.3% year over year holiday sales growth between November 1 and December 24. This figure suggests highest sales growth in the past three years. As a reminder to our readers, SpendingPulse tracks customer spending on variety merchandise including electronics, home furniture & furnishings, apparel and jewelry categories during the holiday season.

Amid the government shutdown and higher taxes, many analysts have predicted restrained consumer spending during 2013 holiday season. Moreover mobile transitioning and popularity of discount and deal websites were also expected to play crucial role in both online as well as offline sales. Many retailers slashed their prices and offered great discounts among other promotional offerings to lure consumers. Holiday season typically accounts for more than a quarter of annual sales and more than third of annual profits.

Consumer Sentiment Index

Retail giants like Wal-Mart Stores, Inc. (NYSE:WMT) that offer products at the most competitive rates, moves most closely to Consumer Sentiment Index as its consumer base is expected to have the least consumer confidence. Consumer sentiment reading for December stood at 82.5 against an estimate of 83, however, it remained much in line with the primary estimate. Moreover, on a sequential basis it was 10% above the November’s consumer sentiment reading of 75.1.

As a reminder, consumer sentiment index developed by the Thomas Reuters and University of Michigan the consumer confidence about spending money in the given economic environment. The results are compiled through telephone interviews and are presented on a scale of 0-100 with 100 being the perfect score.

About Chris Bell

Chris Bell is an investing reporter for GDP Insider. Chris covers financial markets and Wall Street, concentrating on developments affecting individual investors and their portfolios. Chris is also over consumer reporter and covers a wide variety of issues ranging from housing to immigration to urban poverty. Chris graduated from the University of Scranton with a degree in Communication and Philosophy. Chris's diligent investigations earned him the honor of being named "Best Reporter" once by the Headliners Foundation of Texas and once by the Houston Press Club.

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