News

Actions

Low gas prices…a holiday gift for Walmart?

Default-Image_1280x720.png
Posted at 10:26 AM, Nov 13, 2014
and last updated 2014-11-13 13:09:55-05

NEW YORK (CNNMoney) — Wal-Mart is betting that lower prices at pump will drive consumers into its stores this holiday season.

Gas for the majority of Americans is now under $3 a gallon. That’s good news for Wal-Mart because its customers tend to be middle and low income and are therefore sensitive even to minor changes in their discretionary spending power.

“The cost relief from lower fuel prices presents a potential benefit for our customers,” said Carol Schumacher, Vice President of Investor Relations for Wal-Mart, in a call with CNNMoney. “That’s an opportunity for all customers irregardless of what their income level is.”

Wal-Mart is “cautiously optimistic” heading into the holiday shopping season. On Thursday, the company reported a whopping $119 billion in revenue for the third quarter.

The U.S. businesses is picking up again after suffering in recent years. The company reported a half a percent jump in U.S. comparable sales, which was the first positive reading on that front in seven quarters.

The firm overall reported a 2.8% bump in net sales for the third quarter compared to the same period last year. Earnings ticked up to $1.15 per share, beating Wall Street estimates.

But a strong dollar is eating into the retail conglomerates international sales, which it said would have been higher if not for unfavorable currency rate fluctuations. The robust greenback hurts multinational companies doing business abroad that need to convert their revenue back into dollars.

To that end, Wal-Mart slightly lowered its earnings outlook for the year.

Still, Wall Street was pleased. Shares of Wal-Mart rose over 2% in premarket trading Thursday.