Tuesday, December 02, 2008

Saturday in Mourning Black

The last post asked the question of what color the day after Thanksgiving might be this year. Retailers look forward to a "black" Friday when profits turn decisively up. The verdict is still out on just how successful sales were that day, but for some the day after Thanksgiving was no day for celebration. Saturday was cloaked in the black of mourning for an innocent store worker. Jdimytai Damour was trampled to death by a mob of shoppers intent on being first to grab up advertised specials on electronics products at a Wal-Mart store (WMT: NYSE) in Long Island, New York. (Temporary link to NY Times Article)

Really, has our society sunk this low? I think not. Yes, people are interested in getting a bargain and many are quite zealous in their shopping efforts. However, I doubt that any one person in the crowd is that indifferent to the safety and well-being of other shoppers or store employees. Most people who shop at Wal-Mart are probably just like the poor soul who lost his life - working hard each day to make a living and provide for their families.

Has business gone out of control in search of profits? I think yes - at least where Wal-Mart is concerned. Local law enforcement officials reviewing the situation at the store found that Wal-Mart had failed to adequately provide for crowd control. It would not have taken security expert to see the problem. Shoppers gathering in the line through the night knew there was a problem and called the police. By morning over 2,000 people had gathered in the Wal-Mart parking lot and were jockeying for position to be first in the store when it opened.

Crowd control is not rocket science. Large retailers with frequent sales programs or new product introductions, like Best Buy (BBY: NYSE) and Apple, Inc. (AAPL: Nasdaq), use extra security personnel and crowd control tactics as a seamless part of customer service.

Wal-Mart seems to stand out as an operation unable to appreciate the human element of its constituencies - employees and customers alike. There have been reports that certain Wal-Mart stores locked employees into the store buildings during their shifts without access to the outside. Ostensibly the locked doors were to prevent theft. It suggested a callous disregard for individual health and well being to the benefit of Wal-Mart’s bottom line. The same callousness appears to have played out on Long Island this past week, as Wal-Mart management opted for bare bones staffing supplemented only by inexpensive, untrained temporary workers.

Where does this leave investors? WMT shares were off only $0.81 on so called Black Friday, primarily because many believe Wal-Mart could record strong sales during the holiday season as budget conscious shoppers seek deeper value. The stock fell again in trading on the following Monday, but that was most likely due to the rout the entire market suffered.

I would not expect Wal-Mart to suffer any set back from the incident. There will likely be a law suit or two as the family of Mr. Damour and others who were injured seek redress. Local officials may even be successful in imposing fines relating to public safety violations. Yet the dollar amounts are not likely to be material to Wal-Mart’s financial results and they can easily just cut a couple of checks and go on with business as usual.

WMT shares are currently yielding a 1.8% dividend, which might seem appealing to some investors. To others it might seem more like ill-gotten gains from the blood, sweat and tears of innocents.

Neither the author of the Small Cap Copy web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.


Anonymous said...

Merry Xmas kids! Santa wanted to make sure that your Christmas was especially nice, Santa would kill for you!!

Anonymous said...

While I agree that Wal-Mart was negligent in this cetain instance, weneed to remember that they are not the only ones in recent history that have had this type of problem on Black Friday. Most retailers invite this kind of trouble by going after the almighty dollar. Until they realize that human lives are more important than seducing shoppers into their stores at 4 am to get them to buy, this kind of tragedy will continue and probably get worse.
But the retailers are not the only ones at fault. These shoppers, who don't care who they trample to be the first ones in the store are also at fault. Sure, they want to be sure they get the best deal or the latest craze for their loved ones' Christmas, but where is the meaning behind that? Since when does Christmas mean that you have to get physical with your fellow human beings?
It's a sad commentary on many Americans and their priorities in life.