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?
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.
As long as millions of people keep shopping at Wal-Mart they will be making billion dollar profits. Besides, they also funnel millions of dollars for the re-election of the politicians that they have in their pockets. There stock may go down but it really does not hurt them as they will still make a huge profit. Big companies do not like to see there figures go down even by $1.00. For each one of us who complains there are thousands of people who do not care and will continue shopping at Wal-Mart.
MOST OF YOU WALMART BASHERS PROBABLY GOT FIRED FROM WALMART !! BE HONEST !!
THE USA WOULD FOLD LIKE A TENT WITHOUT WALMART !! DO US A FAVOR AND DO ALL YOUR SHOPPING AT DOLLAR GENERAL !!
wal-mart is the U.S.A.'s largest feeder corporation to the escalation of the Chinese Military
Thanks for your $$$$ billions in contributions to the Chinese Military Engine Wal-Mart!!
I hope they go broke, I feel sorry for the workers who would loose their jobs but you can't make a living wage working there unless you become a mindless drone-slave-master manager and even then you don't make that much more. The destruction of main street and the desperation of our working class is having a long term corrosive effect on our national sense of pride.
Do you think for one second if they went broke the stores would remain closed ??, not a chance a slightly less arrogant and abusive big box chain will fill the void, ANY improvement is better than nothing.
I work at Walmart and I am a people greeter...most of our customers are wonderful; and a few have concerns. I try to address their concerns and call on a member of management to help. Can I find a member of management? The answer is no. There arent many employees on the floor to help customers as they have cut back our hours for months. Staff is making minimum wage, works short shifts making sure to use our paychecks for the gas we use to get to this place of employment. Lots of cash registers but with hours cut back...not many can work. I have lost several hundred dollars in pay this year alone. I agree customers are cutting back and they are buying necessities for their families. Has nothing to do with income tax returns it means walking by all the cheap non essential items, stuff that breaks and just trying to get more for the money they have. Employees are in the same boat as I spend half my paycheck in gas and half for food. How can we change this? Contact Arkansas they seem to blame everything on the head office.
I'm really looking forward for the new Cosco store to be built in our city, I will stop going to Wal-mart all together.
Wal-mart doesn't treat there employee's right at all, they are making billions and there employee's don't make enough money to make a decent living, shame on Wal-mart..
Walmart has been successful in squeezing suppliers for rock bottom priceing and if they couldn't give anymore, they would drop them like a hot potatoe and put them out of business.
There are better companies out there...they didn't succeed in Germany and had to leave that market
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