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This morning a friend was mentioning Kunstler's Blog of The Day post about Walmart's announced increase in earnings. I wonder how much of that is due to increased fuel prices (both for the "warehouses on wheels" as well as for the bunker fuel for the trans-oceanic container ships)?
Ignorant, by what logic do you use to come to the conclusion that an increase in Walmart's transportation costs would result in an increase in earnings?
Ron Patterson
Darwinian,
They would have to pass on the costs of fuel. Price of items would go up ... if people bought same number of items at higher cost then total sales (gross earnings) would be up.
Yes? ... No? ...
(I don't call myself "Ignorant" for nothing. Perhaps I am ignorant of some details; if so, please enlighten.)
Ignorant - Despite some difference in terminology that is used: (1) Sales; total sales; gross sales, gross receipts; etc. - these terms generally are not a true indication of financial well being. (2) Earnings; net income; net earnings; total income; etc. - these terms generally are an indication of financial well being.
Those terms noted in (1) are before deducting costs or expenses. Those terms in (2) are after deducting costs or expenses.
For example: You have gross receipts from selling your house for $200,000. Did you do well? Unknown, until you tell us what your cost was. Then you either had income or a loss.
Your equating of Walmart's "total sales" with "gross earnings" would generally be apples to oranges, since you have equated a (1) with a (2).
Jbunt,
Well, THAT was my original question....
Where did these extra earnings for Walmart come from?
Are they "net"?.. or are they "gross" earnings added on to cover fuel costs?.. if so, how much fuel costs were additional?
I think this is a relevant question as it would be an 'indicator' as to how sustainable this particular economic sector currently is.
I think Wal-Mart really is doing well. For the same reason McDonald's is doing well. People are "trading down" - spending their money at less expensive places.
In case you missed it, jbunt, Ignorant asked a question. Then in his followup he asked another question.
And yes, I am aware that you can take certain statements of Ignorant's out of context to try to prove that he asserted something. But read in context he did not and simply stated something then asked "Yes? No?"
So you might try answering the question, eh?
And for me, to attempt to assist Ignorant, I refer him to Wal-Mart Q1 Earnings Up 6.9% as part of the explanation. Simply put, it looks like more people are shopping at Wal-Mart. So both sales and earnings were up.
I can find no public statement relating to fuel costs and Wal-Mart's first quarter financial position so all we can do there is speculate.
No... Just to expand a bit on Jbunt explained. You are confusing "gross receipts" with "gross earnings" and perhaps gross earnings with net earnings. Gross earnings is earnings before taxes. Net earnings is earnings after taxes. Net earnings is what is reported when a company gives "earnings per share", not gross earnings. Marking up prices because of increased transportation costs would add not one penny to either gross earnings or net earnings.
Ron Patterson
Darwinian,
I thought net earnings were free & clear, those after all expenses, not just taxes.
Ignorant, you are still confused. Earnings are not earnings until expenses have been deducted. Gross earnings are earnings after ALL expenses except taxes have been deducted. That is wholesale cost, payroll, utility bills, transportation costs, rent and anything else that must be paid before you have anything left over. What the company earns is what is left over after all this. Then they must pay taxes on their gross earnings. What is left over are earnings or what is normally called "profit". Profit and earnings are exactly the same thing. Just think of it that way and you will not get confused. Then, if it is a public company these earnings are reported as "earnings per share". This is done by dividing the net earnings by the number of outstanding shares.
Ron Patterson
Darwinian,
Thank you.
Ignorant, Grey Zone and Darwinian - I was truly just trying to give an honest explanation. No other message intended. Thanks to Darwinian for making it clearer than I did.