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Manhattan let's dig deeper into the report from Wal-Mart joining us now in golden analysts -- recipe capital IQ and -- This is interesting Wal-Mart cutting itself profit for car sales are down -- in a -- struggle for the low income shopper right now.
Yes -- I think it definitely is.
You know they cited the number one issue facing their core customer.
This is you know wal mart's an internal surveys as the job picture and so you know with the job growth.
Having slowed in real wages.
You know really in you know zero territory I think particularly those low and consumers where you every penny counts they're having a look a little bit of a tough time.
Sixteen because of the result we've seen Wal-Mart really campaign hard on its low prices on the quality of its produce.
-- is that the right approach do you think we know they have low prices -- is that enough.
Yeah I I think it's it's the right strategy and it's what makes Wal-Mart somewhat of a defensive name in this type of environment so.
We're excited about the opportunities with produce they really just.
Gupta is going last this past quarter so we think that's gonna help.
Drive traffic in the future.
It's interesting retailer also we understand focusing is -- -- never has before on that beer and liquor sales hoping to double the alcohol sales.
Is that a Smart move.
Look I think wherever they can now find the growth.
That's that's a positive they they commented that their adult beverages were up but in the high single digits this past quarter and carbonated soft drinks were actually we're down so you know that there just trying to go with the trends.
You know the beginning of the -- we really wondered how much of the higher payroll tax would take.
Out of the consumer's wallet and whether that will be translated the unusual.
Our reaction wasn't that great but is that really starting to kick him now -- we see in wal mart's latest report.
I think it's always been a problem for the core Wal-Mart customer -- that lower income to begin with.
Where they -- there really isn't much cushion I think at the higher end the consumers can can absorb that extra 2%.
But when your -- -- really deciding now whether you can have chicken or steak for dinner.
That's the difference now that's a good point the -- On the international fronts.
Obviously exchange rates Americans cut them which they say it did this time but there also.
Under investigation -- Mexico possibly I was reading in Brazil China.
And India based on bribing local officials to get their -- set up -- How much of a problem is that -- warm up.
Yeah I think there's a little bit of a distraction.
Issue for for management as far as the cost they've they've been creeping up we're now looking at about a 300 million dollar.
Per year run rate for the compliance and investigation cost they've been having a little bit higher higher than we expected.
But you know in the grand scheme of the size of Wal-Mart -- really not talking about a huge number in terms of the UPS.
Very interest things so where do you go from -- -- -- outlook for the rest of the year with regard to the mega stores like -- Yeah we actually upgraded our recommendation this morning on Wal-Mart from hold to a buy and we think -- management having you know reset the bar lower and expectations for the rest of the year.
You know given its underperformance of the given the stocks and the performance year to date.
-- we think now is is a good time to start looking ahead everybody knows the consumers a little bit weak.
We do see some signs for optimism you know later in the year in and into 2014.
And some of those expense pressures particularly on the bribery investigation -- e-commerce should start to taper off.
Very good thank you so much pain go out -- big capital IQ and -- we appreciate your input.
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