Yesterday Walmart reported a $680 million dollar hit to sales because of currency fluctuations. Walmart doesn’t hedge currency risk, doing business in other countries in their local currency and simply converting it back into US dollars when calculating quarterly earnings. For the last decade plus, it was all about companies that were seeing revenue boosts from overseas growth and a weaker US dollar. Now things appear to have flipped.
As I’ve discussed this summer, I expect the US dollar to continue to strengthen against most currencies. For large multinationals like Walmart that don’t hedge this risk on their international sales, expect additional “hits to sales” for the foreseeable future.
Thanks for following and have a great weekend!
-Nick