Today Wal-Mart posted their 2nd quarter sales figures and it seems they are doing quite well. They've posted a 17% rise in net income over last year. What is the explanation for this? Well, according to Tom Schoewe, Wal-Mart's Chief Financial Officer it is because "tough times are actually a good time for Wal-Mart" (AP 10/24/07). Yes, Wal-Mart does well when American citizens are struggling.

Here's the article from Dow Jones Newswire via CNNMoney:

Wal-Mart Stores Inc. (WMT) posted a 17% rise in fiscal second-quarter net income, topping raised expectations and prompting the company to boost its fiscal-year target.

But the company gave cautious initial guidance for the current quarter, largely falling below analysts' estimates, as the world's largest retailer expressed some caution about how U.S. shoppers will fare in coming months now that a boost from federal stimulus checks is running its course.

Nonetheless, Chief Executive Lee Scott said, "While inflation and higher fuel costs are pressuring suppliers, retailers and customers worldwide, we're confident that Wal-Mart is well positioned for this economy."

For the quarter ended July 31, Wal-Mart reported net income of $3.45 billion, or 87 cents a share, up from $2.95 billion, or 72 cents a share, a year earlier.

Earnings from continuing operations, excluding gains last year, rose to 86 cents a share from 73 cents a share. In July, Wal-Mart boosted its earnings outlook to a range of 82 cents to 84 cents a share.

Net sales climbed 10% to $101.6 billion.

Gross margin edged up to 23.6% from 23.3%.

Excluding fuel sales, U.S. same-store sales increased 4.5%, better than the company's May estimate for flat to up 2%. The increase was 4.6% at namesake stores and 3.7% at the Sam's Club warehouse chain.

International sales and profits both jumped 17%. Meanwhile, earnings at Wal- Mart U.S. stores grew 11%, but Sam's Club's profits fell 2.9%.

Looking forward, Wal-Mart expects fiscal third-quarter earnings of 73 cents to 76 cents a share; analysts, on average, were expecting 76 cents a share. Wal- Mart also projected U.S. same-store growth will be 1% to 2%. Chief Financial Officer Tom Schoewe said same-store sales will reflect "some sales volatility from week to week."

For the fiscal year, the company boosted its earnings guidance to a range of $ 3.43 to $3.50 a share, up from February's forecast of $3.30 to $3.43 a share. Analysts' latest estimate was $3.49 a share.

Wal-Mart, which is often viewed as a barometer for the retail industry, has been faring better than most non-discount retailers as economy-battered consumers trade down and seek bargains. The big-box chain has benefited from its strategy of focusing on low prices, using the tagline "Save Money. Live Better." to lure budget-conscious shoppers grappling with rises in food costs and gasoline prices. Federal rebate checks, as well as store-layout improvements and recent product launches, have been cited for helping boost Wal-Mart's performance.

In contrast, sales at department stores and specialty retailers have been lagging, in part because of their bigger exposure to discretionary merchandise. But after Wal-Mart issued a cautious outlook last week for its August same-store sales, shareholders have begun worrying the big-box chain may stop standing out so far from the pack as the effects of the stimulus checks wane and as commodity costs continue to rise.

That presents Wal-Mart - which has pegged much of its success to its low-price advantage - with a common retailer dilemma: whether to raise prices at the risk of losing shoppers or to hold price increases in check at the cost of profit margins.

But Eduardo Castro-Wright, chief executive of Wal-Mart's U.S. division, has maintained that Wal-Mart "will do whatever it takes to retain price leadership." Instead of announcing any price increases to cope with the tough economy, the company has slashed its expansion plans. In June, Wal-Mart cut its forecast for capital outlays this year, as it continues to put the brakes on its once- breakneck growth in building stores.

Shares of Wal-Mart closed Wednesday at $57.88, and there was no premarket activity.