The WSJ has an interview with Mike Duke. Here are the more interesting points.
WSJ: What is your expectation for a robust recovery in consumer spending?
Mr. Duke: Our customers are still under a lot of pressure. We can see it by the way they shop, the products that they purchase and the timing of their purchases.
We have started seeing in recent months that at midnight on the first of the month, we can see the customer there in the store, more than a year ago. That tells us that there is even more pressure on the pay cycle, and on the customer that is receiving benefits [that] the government provides.
WSJ: What are your expectations for the holiday season?
Mr. Duke: There will be a Christmas, there will be a holiday season. It will be late. Last year, when this crisis had begun, many retailers looked at a fourth quarter with declining sales; we didn’t. We actually picked up traffic and new customers. Last-minute shopping was very strong. I expect that to be the same, maybe even more so.
WSJ: Your sales gains started to slacken recently. Why?
Mr. Duke: We sell a lot of food, and we sell a lot of electronics. In the second quarter the rate of deflation was significant. Our [profit] margins have been good, but not because of deflation. It’s not our strategy, nor do we expect, to have increased gross margins over time. Our DNA is to generate savings to pass on to customers.
WSJ: What are customers buying? What is drying up?
Mr. Duke: There are some global trends. Customers are buying basic needs but are not spending as much on apparel. Consumers in mature and developing markets have said, ‘I will invest in my basic needs but defer on discretionary items.’ (Please see related article on page B5.)
We had a milestone a couple of years ago when we began offering generic drugs for $4. That really accelerated customers thinking of Wal-Mart as a place to go for pharmaceuticals.
What is interesting, vitamins have been strong. You might think that would be something customers would cut back on. But customers say, ‘I have to stay healthy. I can’t afford to miss work. I can’t afford to get sick.’
