Wal-Mart Shareholders Have New Reason to Cheer

Shareholders of Wal-Mart Stores Inc. should be even cheerier than usual at its annual meeting this week at Bud Walton Arena in Fayetteville.

Not since 2004 has the global swarm of Wal-Mart associates and stockholders descended on Northwest Arkansas with the company’s share price as high as it is today.

Shares closed at $57.09 on May 28, seven business days before the June 6 meeting. For the last three years, Wal-Mart shares have been well under $50 heading into the annual convention/pep rally.

No retailer has performed better in these tough economic times than Wal-Mart, and that’s no surprise looking back at the 2001-2002 recession.

At the height of that recession which began before – and was exacerbated by – the horrific attacks of Sept. 11, Wal-Mart’s shares closed as high as $63.75 on March 11, 2002.

When the economy eventually bounced back, Wal-Mart’s shares took a corresponding dip as its rapid store expansion cut into its profits and eroded existing store sale numbers. Meanwhile, a wave of negative publicity and fatter pockets led customers to more “socially acceptable” retailers such as Target or Costco.

Wal-Mart’s shares had a brief bump to above $50 following the 2007 meeting when executives announced they were curbing store expansion, cheering Wall Street analysts who’d been demanding the move for years. A month later, the housing collapse and financial market sell-offs saw Wal-Mart’s shares bottom out at $42.09 on Sept. 4.

But with gas prices topping $4 a gallon and food prices rising in concert, consumers aren’t finding Wal-Mart so passé anymore, as evidenced by its first-ever $100 billion quarter during the 2007 holiday season ($107 billion, actually).

Wal-Mart and discount clothing retailer T.J. Maxx were the only two retailers to post positive year-over-year sales numbers while the rest of the industry took it hard on the chin.

On May 13, Wal-Mart reported first quarter earnings and sales of $3.022 billion on net sales of $94.1 billion. Both numbers were records for Wal-Mart. Its sales numbers were up more than 10 percent from $85.4 billion in the first quarter of 2007.

In keeping with its mantra to under promise and over deliver, Wal-Mart has kept earnings expectations in check for the second quarter despite a likely bump from economic stimulus checks now in the mail.