In inflation war, Wal-Mart has front row seat
At its annual shareholder meeting, Wal-Mart CEO Lee Scott said Americans are struggling with rising food and fuel prices.
NEW YORK (CNNMoney.com) -- The high cost of food and record fuel prices are limiting consumers' budgets, Wal-Mart executives said Friday at the company's annual meeting with shareholders.
"I wonder if Sam Walton could ever imagine a day where oil was $130 a barrel or milk was $4 a gallon," said Wal-Mart chief executive Lee Scott at the meeting.
Scott said Wal-Mart customers were faced with difficult decisions about choosing how and where to spend their money, as soaring prices have created a difficult environment for the average consumer.
"The biggest problems out there today are the problems our customers face the most," said Scott. "Rising oil and gas prices are squeezing family budgets, and food inflation is making it more difficult for parents to put a good healthy meal on the tables for their children."
As a result of Americans' cramped budgets, the company's executives said consumers have flocked to Wal-Mart stores because the discount retailer offers competitive prices.
"At a time when everyday Americans are struggling with everyday needs, price matters, said Wal-Mart chief executive of U.S. stores, Eduardo Castro-Wright, at Friday's meeting.
Thursday, Wal-Mart reported a 3.9% same-store-sales gain for May, excluding the impact of fuel sales. Same-store sales are recorded from stores open at the same time a year ago.
"Customers continue to rely on Wal-Mart to stretch their dollars," said Castro-Wright in a statement released Thursday. He reported that grocery sales were strong, as well as sales for flatscreen TVs, computers and digital electronics.
Wal-Mart also got a big boost from consumers who spent their economic stimulus checks. Though Scott had said in May that there was potential for a short term impact from stimulus checks, he noted that the company was unsure how much it would benefit from the tax rebates in the long run.
Wal-Mart (WMT, Fortune 500) Chief Financial Officer Tom Schoewe said Thursday that $350 million worth of stimulus checks were cashed at Wal-Mart stores during the month of May, but it was unclear what products customers spent that money on.