Wal-Mart Stores Inc.'s second-quarter results, to be released Tuesday, should offer a clearer window into its working-class consumers and thus the overall economy.
It will also give analysts more insight into its merchandise strategy, which seems to be in flux amid executive departures and shuffling, including a new chief for its U.S. Walmart business.
Here are four big questions investors will have about Wal-Mart's second-quarter results:
1. What's up with weak sales?
The world's largest retailer could show its fifth straight quarter of declines for a key revenue measure even as profits are expected to increase amid cost-cutting and overseas growth.
Analysts surveyed by Thomson Reuters forecast 96 cents per share on revenue of $105.3 billion. In last year's second quarter, Wal-Mart reported 88 cents on $100.9 billion.
Joe Feldman, managing director and senior research analyst at Telsey Advisory Group, expects revenue at stores open at least a year to fall slightly. That follows a 1.1 percent drop in the first quarter, dragged down by its namesake discount division.
Wal-Mart's own internal forecast ranges anywhere from a 2 percent decline to a 1 percent increase. The measurement is considered a key indicator of a retailer's health.
Analysts say the figure could turn around as early as the third quarter. One big reason is figures will be compared with declines a year ago.
That runs against the grain for many retailers, who are facing harder comparisons as they saw their first increases in the fall of 2009 on top of deep declines in the previous year. Wal-Mart restocking brands it dumped could also boost customer counts.
Would rising sales be a good economic omen? Maybe not.
"The economy will be soft enough that aspirational shoppers who were trying to trade up may be trading back down again," said Ken Perkins, president of research firm RetailMetrics.
2. How's the economic health of Wal-Mart's primary customers?
"Wal-Mart's core customer remains under significant pressure," Feldman said.
Wal-Mart, which generated more than $400 billion in revenue last year, serves as a key barometer of consumer spending.
What's worrisome is that in May when it reported its first-quarter results, its main customers were having a harder time stretching their dollars to the next paycheck, and the number of customers on food stamps spiked. And that was back when the economy's recovery was showing signs of momentum.
Now, the recovery is stalling. That doesn't bode well for Wal-Mart's customers, who typically don't have a safety net of savings. Analysts will be studying executives' comments to see if its customers are even worse off than in May.
3. Wal-Mart benefited during the recession as affluent shoppers traded down to cheaper stores. But it has acknowledged in recent months it's losing some of the customers it tried to woo with trendier apparel and home furnishings. What's the strategy now?
Wal-Mart appears to have abandoned efforts to court more affluent shoppers, except for in electronics, David Schick, a retail analyst at Stifel Nicolaus, wrote in a recent note.
In fact, after trendier offerings haven't fared well, Wal-Mart has gone back to basics such as socks and underwear.
Some analysts who recently checked out Wal-Mart's back-to-school assortments believe that Wal-Mart has now gone too far in the other direction.
"You're seeing too many basics," said Brian Sozzi, analyst with Wall Street Strategies, citing jeans, backpacks, towels and even notebooks without any frills.
In addition, Wal-Mart has acknowledged that its campaign to declutter its stores went too far, leading shoppers to flee to other rivals such as Target Corp. for favorite brands. It has been scrambling to restock some products over the past year.
4. What's the effect of the series of management changes?
Bill Simon, formerly chief operating officer, took over Eduardo Castro-Wright's job as president and CEO of the company's U.S. operations in June. Castro-Wright will lead the retailer's e-commerce unit Global.com and its global sourcing division. He will remain vice chairman of the company.
Analysts will want to get a sense of Simon's approach to increasing customer counts and improving sales in the final months of the year.
They'll also want to know any details about a replacement for chief merchant John Fleming, who left Aug. 1 and played a big role in shaping what was on store shelves.