Wal-Mart may be its own worst enemy

It's blaming a weak outlook on consumers cutting back. But then why are so many of its retailing rivals doing just fine?

By Jonathan Berr Feb 21, 2013 1:58PM
Wal-Mart store in Secaucus, New Jersey / Jin Lee/Bloomberg via Getty ImagesWal-Mart's (WMT) struggles, as seen in its latest quarterly report, are obviously not good news for shareholders of the world's largest retailer, but they might not be bad news for the country as a whole. That's because many of Wal-Mart's rivals are doing just fine.

When the U.S. economy started to tank, the Bentonville, Ark., company's low prices attracted cash-strapped consumers. But now, as the economy continues to rebound, consumers may be less worried about prices and more attuned to other aspects of their shopping experience such as customer service, which has never been a forte of Wal-Mart.

According to Wal-Mart, many people continue to struggle because of the rise in the payroll tax and delays in getting tax refunds from the IRS.

Wal-Mart's gloomy outlook confirms the sentiment echoed in internal memos recently leaked to Bloomberg News about the chain's poor performance in February. The company's forecast for first-quarter earnings was below Wall Street expectations, but the shares are trading up so far today. Raising its dividend by 18%, to $1.88 annually, is offsetting some worries about Wal-Mart's gloomy forecast.

Wal-Mart expects comparable sales to be flat in the current quarter as uncertainty about the economy continues to weigh on it. The Associated Press reported today that the number of Americans seeking unemployment benefits rose in the most recent week. Consumer confidence also declined in January.

These macroeconomic forces affect all retailers, but many are doing better than Wal-Mart.

Its chief rival Target (TGT) recently reported a better-than-expected​ 3.1% gain in January sales in stores opened at last a year. Comparable sales at TJX (TJX) rose 3% during the same time, exceeding the expectations of the parent company of TJ Maxx, Marshall's and Home Goods. Macy's (M), an up-market department store chain, recently reported that January same-store sales rose a better-than-expected​ 11.7%. (Wal-Mart doesn't report monthly sales.)

If Wal-Mart continues to struggle, investors may find it hard to believe that the fault lies entirely with penny-pinching consumers.

Jonathan Berr is long Target. Follow him on Twitter @jdberr.


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421Comments
MIKE TROCH
Feb 21, 2013 4:45PM
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Putting aside better judgment, and at the request of a manager at a local Wal-Mart, i took a position as a supervisor. i turned in my notice before the end of the second week because of the way they were treating their workers. they were working part time workers 24 hours a week and making them work 5 days a week only getting 4 or 5 hours a day, and making less than 40.00 dollars a day, yet having to travel to work 5 days to make that 40.00. take out taxes, food, gas and travel expenses and the worker might be lucky to make 25.00 a day, and all they had to do was schedule them for 3 8 hour shifts to help them out. they prey on the very needy for workers. i left and have not been in another Wal-Mart since, and continue to tell others the way they treat people and this is why they can keep their prices low, because it is at the expense of the workers. the owner, sam walton did the same thing when the company was founded, when he used women from the farms when times were bad and paid them little to nothing, but the families needed the money, so times haven't changed, they have just gotten richer from needy people. they aren't to big to fall, the roman empire did.
arizonaron
Feb 21, 2013 4:32PM
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If WalMart was the last store on earth, I wouldn't shop there. They are a cheap company who treat their employees like crap. I worked for them and know how they operate. I would never shop there.
Sarduci1
Feb 21, 2013 4:50PM
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I wonder what happens when the largest retailer sells foreign goods at cheap prices.  Thus putting many Americans out of work, thus having fewer  to buy their goods??  Walmart is everything America isn't.  Walmart, pay your workers a fair wage, give them health, vision, dental benefits you can afford it.   Take a bit of your billion dollar profits and invest it back into your workforce.  GREED at its best.
Achieved a SS check
Feb 21, 2013 4:03PM
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Walmart treats its customers badly. They are always understaffed at registers 30 to use 4 in operation. After 12pm down to 1 cashier, till 7Am.  Then you just wait,and wait,and wait in could be half hour line. I have left my cart full of stuff ,and went and told the on duty manager why I was leaving the cart. Management neithers cares about the customers or the help. I now shop at a store that always opens another when it sees a couple of people waiting. Prices may be good , but people hate to shop their,and I know many,many people who don't. PS I  live in new resort like community of thousands of families. I would not want to have lost this base. Goodbuy Walmart !
hemispheres
Feb 21, 2013 4:40PM
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Perhaps the American people are getting tired of a company that has the preponderance of it's goods made in Communist China.

How soon we forget we fought the Communist Chinese vicariously in the Korean conflict and the Vietnam war in the failed attempt to thwart communism but this company, Wal-China-Mart propagates communism.

How endearing to hire a Chinese worker over an American worker for  unbridled corporate avarice.

Shop at Walmart and help support communism.

digital910
Feb 21, 2013 4:37PM
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I'm retired and have been working for Wal-Mart for about one year part time.

Here's MY take on the company and shoppers. First the shoppers.  The majority of the folks are wonderful people looking for a bargain. Now the rest are just plain slobs that want something for nothing, They come in dressed in their best clothes, women have their gold rings, ear-rings, piercing , tan bodies, hair done up nice and a buggy full of food and other stuff. Once I ring them out  on the average of at least one hundred bucks, the whip out their FOOD STAMPS to pay for their FREE food and then put the remaining balance on a credit card!!!! Get a ****ing job you scum bags, quit sucking off the system ya scum bag welfare ****s.  People OPEN packages to see what's inside , duh , just look at the picture you idiot. Now once its open, no -one wants it cuz it WAS OPENED!!!! ****s....Things are marked down and people want more of a mark down.... Ya cheap prick.... if ya don't want to pay the marked down price, just don't buy it!!!  Theft  runs amuck their... most from Health and beauty products... Once again, if ya cant afford it, don't steal it, get a f----- job... The management had NO A CLUE as to how to run a store... They couldn't manage their out of a paper bag, let alone manage a store. Understaffed and under paid,   I do agree they should hire and schedule more people but their pay is tied to profit and saving money. They could care less about how long ya have to wait in line... More savings  from employee staffing is more pay for the managers. Also today's work force is terrible. The kids have NO work ethic. They are constantly on their phones, ipad and are tweeting and not paying attention to their work. Lazy, just lazy... They call of all the time, that's one reason there is no one to assist you in the store....

max sparticas
Feb 21, 2013 5:22PM
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Maybe a name change would help ? Something like, China-Mart or The China Outlet Store. How about a new slogan, Child labor, the key to low prices, From our slaves to yours, keeping prices low, Low wages, no benefits, help us build the American Dream or In China we jump out of windows to keep your prices falling, Wal-Mart making the leap for you.
Kentucky Stumbler
Feb 21, 2013 5:29PM
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We subsidize every Walmart store with Food stamps,Medicaid and child care vouchers to the tune of $ 500,000  tax dollars per store, This is all part of there corporate model ,due to there low pay and part time work tactics. They know how to use our government a heck of a lot better then we do ! The Chinese are well aware of our stupidity and so is the Walton family ? Huh .  
Delmar Fairchild (DelofBarron)
Feb 21, 2013 3:50PM
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In our WalMart, I had to wait at least 15 minutes before someone passing by the sporting good asked if I needed anything.  There just doesn't seem to be as many people working there as there once were.
ricardo madera
Feb 21, 2013 5:00PM
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as a old walmart employee(sam's) i notice the shelves are not filled and many items are missing. also, more cashiers are needed when it is busy. where are the managers? used to be there was always a manager up front to keep things running. i think they are in the back on computers???
Tuckers Dad (tuckers dad)
Feb 21, 2013 4:26PM
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Walmart  , People are wising up.   I,ve bought clothes there, cheaper and lasted shorter.  You get what you pay for as the old saying goes.  Some things are ok but others not.   Buying electronics is a gamble, if your device goes bad you have to ship it to authorized mfg center.   
Ed61
Feb 21, 2013 6:41PM
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As the largest employer in this country and paying wages which are at or near the poverty level it seems to me that Wa-Mart is contributing to the decline in our economy.  Wal-Mart's should change their slogan to, Keeping The Little Man Down.
namewanted
Feb 21, 2013 6:19PM
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Maybe, in a recession when Americans could use outsourced jobs in China, people are just getting TIRED of supporting anti-American tactics of getting wealthy!! And, cheap is as cheap does...Wal-Mart will cut air in the summer and heat in the winter to "keep costs down" while employees suffer. I suppose that "slave-labor" mentality doesn't only exist to exploit the Chinese sweatshop and factory workers, but also Americans who are hired for minimum wage! The most disgusting part of Wal-Mart was the Christmas holidays (a year ago) when the crowd of animals outside the store in New York stampeded a security guard, killing him, and the store reopened the same day just a few hours later. Never mind regard for human life that was snuffed out in YOUR store, just keep those cash registers filling!!!
nyunionman
Feb 21, 2013 4:40PM
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f wal-mart they been fing us for yrs

 

john simon
Feb 21, 2013 4:58PM
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Wal-Mart is the proof positive example of our country's transformation into a corporate cesspool.  It's our form of corporate greed and profits over its citizens right here at home.  They make there crap with cheap labor and pay a couple baby sitters to collect your money.  It's a breeding ground for the unemployed and for welfare cats.  I buy my toilet paper there because I like to know I'm wiping my Arz with something from that nasty unamerican hell hole.  And who works there, imigrants who don't pay taxes and collect welfare and social security. And then you know what they do with their money, they take it back to the country of origin where they live like kings.  This process is passed down from generation to generation.  Hey, go spend 7 years in the States, you can get a job that pays better than here(Mexico, China, India, etc, etc) and they will give you extra on top of that including free healthcare and a free education.  You won't even have to pay taxes.  They do this with entire families, large families.  They milk our system, take advantage of our freedoms, piss and shat before they leave and forget to clean it up. 
bye birdie
Feb 21, 2013 4:00PM
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they lay them all off after xmas to save a buck - you know the customer comes first -  just ask them 
REGAL MAN500
Feb 21, 2013 4:11PM
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This is about the 3rd negitive article I`ve read about Wal-mart in a week.Their stock is down about

1%.The truth is they make billions and their competitors are scared to death of them.when

they do get fined a billion it`s like us getting fined $1 and life goes on.

Rational-Thought
Feb 21, 2013 5:35PM
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As Walmart continues with it "dumb down America " business model most all of us will eventually be shopping at Walmart because their China made goods will be all we can afford. Someone earlier tagged Walmart as "Chinamart" and it aptly fits.
vb464
Feb 21, 2013 4:46PM
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walmart here in town suck **** they never keep stock they are always out of stuff the staff could care less if you need help or not its definitely not customer first with walmart.
rapidr
Feb 21, 2013 4:28PM
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its about the employees, even if they are receiving a poor wage a good employee with good ethics will still perform well, but will always move on to bigger and better jobs if they are not in there comfort zone. Its when you get employees that are poor workers with a poor wage and in there comfort zone that customer relations will take a dive. If you top that off with a store manager with that same criteria that store may be in a steep decline unless higher ups replace these infections.
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