Did IT Help Wal-Mart's Quarterly Financial Results?
The retail giant turned a nice profit amid retail doom-and-gloom, and IT certainly played a key role. But just how much of the success is directly attributable to IT's efforts and Wal-Mart's newly installed retail applications is harder to figure.
For most companies it's difficult to link any IT-driven initiative to an increase in the bottom line, and financial results that specifically call out IT's positive contributions to quarterly results are few and far between on Wall Street.
Of course, it's much easier to point out how IT can drag on earnings: Weinswig noted in her report that Wal-Mart's earnings were "deleveraged" by higher-than-expected SG&A (selling, general and administrative) costs relating to three long-term and "transformational" merchandising, finance and HR projects. (The finance and HR projects are Wal-Mart's installation of an SAP package.)
Even with the good news, Wal-Mart and other retailers face a tough year ahead. Wal-Mart executives told the analyst community that it estimated same-store sales to be flat or up only 2 percent and forecasted first-quarter 2008 earnings that might not meet analysts' expectations.
Now more than ever, it appears, Wal-Mart will need to lean on its IT systems and new retail applications during the next fiscal year.
