Wal-Mart execs see 'total disaster' in February sales
An internal memo says higher payroll taxes and delayed tax refunds are killing early sales for the month. The shares are the biggest drag on the Dow.
Wal-Mart Stores (WMT) shares slid Friday afternoon after Bloomberg News reported that the retail giant had its worst monthly sales start in at least seven years as payroll-tax increases hit shoppers already battling a slow economy.
"In case you haven't seen a sales report these days, February MTD (month-to-date) sales are a total disaster," Jerry Murray, Wal-Mart’s vice president of finance and logistics, said in a Feb. 12 email to other executives. "The worst start to a month I have seen in my ~7 years with the company."
Wal-Mart had been expecting a strong start to February because of the Super Bowl, milder weather and paycheck cycles, according to the minutes of a Feb. 1 officers' meeting Bloomberg obtained. January sales had disappointed as well.
The shares closed down $1.52 to $69.30 after falling to as low as $68.13. The shares had fallen 57 cents to $70.82 on Thursday. Wal-Mart was the worst performer among the 30 stocks in the Dow Jones Industrial Average ($INDU) for the day and for the week. The index closed up 8 points to 13,982 on Friday but ended the week off 11 points.
Wal-Mart subtracted 12 points from the Dow on the day and 17 points for the week.
Wal-Mart and discounters such as Family Dollar Stores (FDO) had been worrying that the higher payroll tax would take a bigger bite from the paychecks of shoppers already dealing with high unemployment. The nation's Social Security tax rate had climbed to 6.2% on January from the 4.2% rate that had been temporarily in place in 2011 and 2012.
In addition, the Internal Revenue Service didn't begin processing income-tax returns until the end of January because Congress didn't approve tax-rule changes until Jan. 2. The approvals were delayed as Congress and the White House haggled over the fiscal cliff.
The combination of higher payroll tax and delayed tax processing is believed to have dampened retail spending in January. The Commerce Department sales had risen just 0.1% in January over December but were up 4.4% from January 2012.
A number of companies have been complaining about slower sales as 2013 begins, citing the higher payroll tax and the tax-refund delays. What's not clear is if the declines are temporary and will weigh on the economy.
For Wal-Mart, January was a month to forget as well, Bloomberg said.
"Have you ever had one of those weeks where your best-prepared plans weren’t good enough to accomplish everything you set out to do?" Cameron Geiger, senior vice president of Wal-Mart U.S. Replenishment, asked in a Feb. 1 email to other executives. "Well, we just had one of those weeks here at Walmart U.S. Where are all the customers? And where’s their money?"
A Wal-Mart spokesman would not comment on the emails except to say, "As with any organization, we often see internal communications that are not entirely accurate, that lack the proper context and represent individual opinions.” David Tovar noted the company will report fiscal-fourth quarter results before Thursday open.
Wal-Mart shares had already been struggling Friday on news that its Asda supermarket subsidiary in Britain had pulled its inventories of fresh beef bolognese sauce from its 500-plus stores after tests of the sauce showed traces of horse meat.
Europe has been reeling from a broadening scandal over food inspections after tests showed in many countries that what was supposed to be hamburger and other beef products turned out to be beef with horse meat or just plain horse meat.
Some tests also showed traces of the equine pain killer phenylbutazone, or bute, in the burger. At the very least, horse meat sold for human consumption can't contain any bute in Europe, according to the Guardian newspaper.
Asda and 10 other British food retailers on Friday in publishing a public letter on Friday stating that they shared food shoppers' "anger and outrage"
The United States no longer slaughters horses or imports horse meat from other countries, ABC News said.
More on moneyNOW
So.....if they blame the increase back to 6.2% on SS taxes, then what will happen when minimum wage goes to $9.00/hr. ?
Same difference ??
So Obama has decimated the working poor so bad they can't even afford to shop at Wal-Mart?
Oh I forgot, the private sector is doing fine.
What....the WM befoons has to blame it on something so they blame it on the higher taxes. **************** Wal-Mart was the worst performer among the 30 stocks in the Dow Jones Industrial Average () for the day and for the week. The index closed up 8 points to 13,982 on Friday but ended the week off 11 points.********************** Why isnt the other retailers suffering as much as WM?
Those marons in B-Ville just don't get it.....most folks are sick and tired of WM
you voted for him, I didn't.
guys it's not just Wal-Mart. yes, they're easy to attack but that's not the point. this administration is running business into the ground riding the wings of equality.
the fact is that that you cant legislate equality and those of us that are carrying the weight of those of us that cant carry their own weight need to have the opportunity to earn as much as we can for the betterment of the whole...don't you get it?
I have to feed my own family before I can feed yours. Sorry. If Obama makes it more difficult for me to feed my family then your family will suffer because I don't have enough to go around anymore.
You can raise my taxes so that you get yours before I get mine, which he his doing, but he is playing with fire and his non-economic background (community advisor, whatever that is?) will leave him with a worse post-administration legacy than even George W. Mark my words America...
Americans are now in a no-win situation with the Wal-Mart machine.
If W-M sales increase and it makes money, Americans working for the company suffer from sub-poverty level wages and drag down all taxpayers from reliance on government health and welfare programs despite having a "good job". W-M would also continue to grease small government to move into unturned areas so that all local businesses are wiped out to create more "company towns".
If W-M sales drop due to several potential reasons, bad product quality among them, this ultra-wealthy corporation will simply pull up stakes in towns where the numbers are not adding up, thus leaving empty buildings and malls in the company towns they reshaped from formerly normal towns, empty and reeling.
I don't feel sorry for Wal-Mart or its "shareholders" but think that each state needs to develop their own strategy for how to protect their citizens from monster companies like this one.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] The major averages finished the session on a modestly higher note, but not before heavy selling pressure sent the Nasdaq Composite (+0.3%) for a test of its 200-day moving average. The S&P 500, meanwhile, added 0.7% with all ten sectors posting gains.
Equities climbed at the open with the advance built on the relative strength of biotechnology and other momentum names. Despite the solid early gains in those areas, the market began fading from its high as multiple ... More
More Market News
The company has made at least 4 acquisitions in the space, and few people have paid any attention.
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'