Wal-Mart To Continue Retail Success: Analysts

Wal-Mart is reporting third quarter earnings on Thursday and has so far out performed other retailers during the recession. The question is whether the retailing giant can continue to draw in customers as the recovery seems to be picking up.

Giving their opinions Wednesday were Daniel Binder, senior equity research analyst and managing director at Jefferies & Co. and David Strasser, hardlines/broadlines retail analyst with Janney Montgomery Scott.

"I think value is going to be in vogue for some time," said Binder. "And while other retailers are showing somewhat better results, I think that if you look out over the next few years, you are still going to see a very valued consumer and that's Wal-Mar'ts sweet spot. I think there are brighter days ahead for them."

Strasser agreed. "I think what happened was that when things were bad, Wal-Mart was ready and they had the right merchandise," said Strasser. "They re-modeled the stores and people liked what they saw and I think that will continue."

But there are some hurldes says Binder. "I think Wal-Mart faces its biggest challenge in food delfation, and the deflationary trends there," says Binder. "That's putting pressure on the top line and we should see that in their earnings results."

As for their growing online presence, Strasser says they are doing well. "The online business is so small for them that they can be aggressive about it," said Strasser. He went on to say that he expects to see more discounting for Wal-Mart's online products.

Binder said that he didn't expect Wal-Mart to surprise on the upside with their earnings because of the food deflation issue.

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Disclosures:

Both Strasser and Binder own Wal-Mart stock.

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