Let's dig into some of the recent retail earnings reports and extract evidence of the end of the trade-down effect.
Inferior/Low End: Wal-Mart (WMT) reported reported fourth-quarter 2010 EPS of $1.17 vs. analyst estimates of $1.12. The company benefited from strong international sales but missed out on revenue expectations due to disappointing sales in the U.S., where same-store comps fell 1.6%.
At the same time, Wal-Mart warned that it was expecting soft sales for the first-quarter and fiscal-year 2011, evident in its guidance for fiscal-year EPS of $3.90 to $4 vs. analysts' expectations of $3.97. This would imply earnings growth of 7% to 9% in the coming year.
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