Wal-Mart has company in Wall Street's doghouse

The discount giant joins other big chains in posting disappointing results and tepid outlooks. But it seems to be faring worse overall.

By Jonathan Berr Aug 15, 2013 11:47AM
Wal-Mart website (© M4OS Photos/Alamy)Where have all the shoppers gone?

Heading into the critical back-to-school season, Wal-Mart (WMT)Kohl's (KSS) and Macy's (M) have all recently reported disappointing quarterly earnings. Consumers don't appear to be moving online, either. Amazon (AMZN) the world's largest Internet retailer, also posted results that lagged Wall Street's expectations. The reasons for retailers' struggles are hardly a secret.

Although it's trending downward, the unemployment rate remains stubbornly high at 7.4%. Lower-income consumers are being pinched by a 2 percentage point increase in Social Security taxes. Consumer confidence fell in July from a five-year high, indicating that wealthier Americans aren't feeling flush with cash, either, although more are buying big-ticket items such as cars, homes and appliances because borrowing costs remain low.

In theory, this should be Wal-Mart's time to shine. Under CEO Mike Duke, the Bentonville, Ark., company has relentlessly pounded the message into the subconscious of consumers that it's the low-price leader. But as Thursday's earnings reports shows, that message may not be resonating with consumers. 

Not only did the retailer miss Wall Street's expectations, but it also said earnings for the rest of the year would be worse than analysts had expected.

While other retailers are facing the same issues, they appear to be handling them better than Wal-Mart.

For instance, the discount giant reported a 0.3% drop in U.S. same-store sales (sales in stores open for at least a year) in the most recent quarter. Analysts had expected a 0.9% gain. Kohl's, which also reported earnings on Thursday, had a 0.9% jump in that critical metric. And while Macy's same-store sales fell 0.8% in the most recent quarter, it expects to generate gains of 2% to 2.9% this year.

Addressing Wall Street analysts on today's earnings conference call, Duke tried to sound an optimistic note, saying "We expect to see improvement in all of our segments in the back half of the year." 

Indeed, consumers responded favorably to its fresh produce, and its apparel and home goods categories rebounded in the quarter. The company also has high hopes for its e-commerce business. Investors, though, are going to want deeds to back up Duke's words heading into the critical December holidays.

Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.

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385Comments
Aug 15, 2013 12:16PM
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This country is broke, HOW HARD IS THAT TO UNDERSTAND... The stock market has nothing in common with main street....
Aug 15, 2013 12:18PM
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Walmart's aisles are cramped and there's usually merchandise strewn across the floors.  The produce is often rotting, they never have sales like other stores do.  The employees are mostly abused and miserable.  Why would anyone shop there if they have an alternative?

 

Aug 15, 2013 12:27PM
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America is waking up - we no longer want "made in china" towels, sheets, and products.  We want to go back to work and if buying American will do it - then its about time.  The only problem with that is  someone in Washington made the deal with foreign companies to flood our markets with cheaper products and as a result, companies went overseas.  Now the american people are changing and leaving "you know who" looking foolish.  What goes around comes around.
Aug 15, 2013 12:30PM
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Walmart shoppers went elsewhere because there is too much wrong with the stores. Not enough cash registers opened at any time, poor service, employees not knowledgeable about where to find items in the store are the major reasons that I very seldom go into a Walmart store. Poor meat selection and poor produce are the reasons I do not buy groceries there.
Aug 15, 2013 12:15PM
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The unemployment rate keeps trending downward because people keep dropping out of the labor market.
Aug 15, 2013 12:42PM
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As a consumer and human, I just will not do business (Spend MY money) at a Corporation that treats its employees badly. Walmart is the worst, and if they went away tomorrow, no one would care. They should take a page out of their founders book, and push to "Buy American", more Americans employed... But when you put profit over people, I'll be shopping elsewhere.
Aug 15, 2013 12:14PM
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We've had 3 quarters in a row of sub 2% GDP growth.  We haven't seen much job growth over the last few years and most of the jobs created pay near minimum wage.  Interest rates have recently inched up.  And no one really seems to know what's going on with Obamacare or when or how it might be implemented.  These underwhelming earnings reports and lackluster forecasts from the big retailers shouldn't be a surprise to anyone.
Aug 15, 2013 12:24PM
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Hasn't this been discussed repeatedly? The world doesn't need a Wal-Mart oligarchy, it needs a Main Street revival. The business platform took a humble salvaged goods retailer and bullied iconic brands into shipping jobs and operations overseas just so the cheap imitation product could be imported and retailed so cheaply that it would destroy Free Enterprise everywhere. Why we haven't nuked the HQ in Bensonville, AR is beyond me. Consider too that every night around 1pm wherever you live in America Wal-Mart is sweeping away (electronic banking) a tremendous chunk of the currency your community vitally needs to stay afloat. Another reminder, the inheritor heirs of Founder- Sam Walton have more wealth than 130,000,000 Americans. I'd rather see the place shuttered for good and 130,000,000 get back to living again. How about you? 
Aug 15, 2013 12:33PM
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I don't shop in Wal-Mart hardly at all anymore. I've been in a Wal-Mart twice in the last three months and I couldn't hurry fast enough to get out of there.  They don't have the item stock, or it's higher priced than elsewhere. I also hate long check out lines, so no I am not going there. I can also sense the employees have no interest in working there and the so-called fresh vegetable re not so fresh.

 

 

Aug 15, 2013 12:34PM
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What part of "we don't have any "F" ing money do they not understand? They should know better than anyone since they are America's largest employer that has become accustomed to never giving a damn raise to anyone except the upper management!  How did this happen? Lets see, you have 1000 worker bees that make squatt diddly and 5 managers that make golly wads, wow, rocket science tells me that 1000 worker bees stimulate the economy better than 5 multimillionaires. I must be a "F" ing genius. This still discombobulates the "F" outta Romney however. Wal-Mart employees are disgruntled and quite frankly they don't give a damn if you buy or not, why would they? It will not effect their wallet regardless of how much money the company makes.
Aug 15, 2013 12:37PM
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I am very sorry but how on earth does Wall Street and Our Government expect people to spend when all extras to spend are going into the gas tank!

 

With gas prices so ridiculously high and with the board members of gas corps and their CEO CFO COO's taking home millions in annual bonuses How and WHERE On this COUNTRY'S Earth are supposed to find extra funds to spend at Dept. Stores.

 

When it al goes into the Gas tank and with ever increasing cost of food---where are We Americans supposed to find the money to spend on clothes and supplies?????

 

Someone please tell me where the excess funds come from with the ever rising price of food and gas! 

Aug 15, 2013 12:17PM
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Where are all the Wal-Mart shoppers? It's only noon, they are still in bed. HAHAHAHAHAH.
Aug 15, 2013 12:18PM
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They lost me when they pulled Paula Dean products !!!!
Aug 15, 2013 12:41PM
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I spend my hard earned money at Local business and use cash so they don't have to pay the stupid credit card fees.

I hate Walmart and all it is.  Minimum wage are you kidding me.  And you , hey you, my fellow Americans, stop letting companies screw your fellow citizens.  You just say " they can work somewhere else if they don't like it" .  Jerks

If everyday people don't have money the economy can't grow. The 1% don't put money into local economies, you and I do. Be a job creator and mail a letter every once in awhile to your Grandma or mom.  Jeez  E Bills are killing the Post Office. Come on People, hang up your stupid phones and participate.

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You want to know the truth? Since prices have kept climbing,  I am going to Family dollar, Thrift stores and Yard sales more. I even found a place that gives away free used( and a few still sealed in package) books, cd's, dvd's, vcr tapes, and video games.
Aug 15, 2013 12:38PM
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Oh and forgive me, I forgot that banks no longer offer a decent Savings Interest Rate---you know the one which used to help us pay bills or provided some extra funds to SPEND WITH!
Aug 15, 2013 12:34PM
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people are fed up with walmart rotten foods and junk and goodwill type clothes ,also the snobby employees especially management are you all that blind or do you own thousands of shares of they're stock
Aug 15, 2013 12:19PM
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Wal-Mart has long since taken up residence in my dog house as well.
Aug 15, 2013 12:18PM
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walmart doesn't have anything to sell, the shelves are mostly empty. They will be history

in 5 years

Aug 15, 2013 12:22PM
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Between their capitulation to the anti gun lobby and the fact that they never have Ammo stocked, I have given up on them.
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