Good news for Walmart (WMT): The company reported third-quarter earnings of 84 cents a share, which was three cents higher than Wall Street’s forecast. It was even higher than Walmart’s own projected range of 78 cent to 82 cents a share.
But here’s the key fact: Walmart is improving profits, not by growth, but by cutting costs. Sales at U.S. stores open for at least one year dropped by 0.4% which was below the company’s internal forecast. The company simply cut costs faster than sales shark.
This is further evidence of the Productivity Revolution going on in American business. What we need now is a Medifast (MED) for corporations–someone to cut out the fat. Despite the earnings beat, I still rate WMT a sell. The good news is that Walmart raised its full-year guidance to $3.57 to $3.61 a share from the prior forecast of $3.50 to $3.60 a share, so I may upgrade the stock in the coming weeks.