What's going on?

Wal-Mart, formerly known as America�s most�valuable retailer (a title usurped earlier this year by Amazon), said it made more money than investors were expecting in the most recent quarter � and the stock rose 3.5%. It might be a sign that the company�s recovery has commenced (a.k.a. �green shoots�).

What does this mean?

While that sounds pretty good, Wal-Mart only beat expectations because it had made some previous announcements lowering its profit guidance � so it was setting itself a pretty low bar. It lowered its guidance because it said it would spend more money improving its in-store and online customer experiences (and because it raised�pay for its employees). Tuesday�s results showed some data that suggested, perhaps, that Wal-Mart�s efforts are paying off: customer visits to Wal-Mart rose, sales at its US stores increased and inventories (a.k.a. excess merchandise) declined (remember, a big increase in inventories contributed to a large sell-off in Macy�s stock last week).

Why should I care?

1. The bigger picture: Wal-Mart, like other American companies, is hurt by a stronger US dollar. The increased value of the dollar hurts Wal-Mart�s overseas profits because those foreign profits become worth less in US dollar terms when they are converted into US dollars. This is a major way in which a stronger US dollar can lead to lower profits for US-based companies that have international operations.
2. For the stock: It�s a small bounce in an otherwise terrible year. Wal-Mart stock remains down 30% in the past year. These results�are a bit of good news and it might be an initial indication that Wal-Mart�s turnaround plans are starting to work. But there is much of the plan left to execute and the power of Amazon�s offering isn�t fading. More time and evidence is probably needed before the market becomes more confident that things are sustainably improving�for Wal-Mart.