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Walmart's Earnings Reflect Overall Consumer Woes

Walmart's Earnings Reflect Overall Consumer Woes Credit: trekandshoot / Shutterstock.com

Walmart's recent quarterly earnings should serve as a warning sign to businesses of all sorts, according to one financial publication, which also predicted the rise of gold prices and the housing market bust.

Michael Lombardi, the lead editorial contributor to Profit Confidential, a weekly financial newsletter, said that Walmart's quarterly sales reveal weak consumer confidence. Rising commodity costs and inflation are worrying consumers, he said.

 “Even Wal-Mart noted that consumers are worried about rising food costs and rising energy prices,” Lombardi said.

Walmart's quarterly sales, reported in February, missed Wall Street estimates because its price-cutting strategy reduced margins, Lombardi said.

 “Wal-Mart is focused on reducing its costs, like pulling more greeters from the entrances. This is because the company does not see an ability to raise its prices in 2012, as consumer confidence struggles,” he said. “With the unemployment rate high, job security uncertain, and food and energy costs rising, consumer confidenceis nowhere to be found.”

Lombardi says Walmart is feeling the crunch because commodity prices are rising, but the retail giant known for rock bottom prices isn't willing to raise praises while consumers are pinching every penny.