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.


422Comments
Feb 21, 2013 7:02PM
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the guy that wrote the article handle is long TARGET .. hmmmm???
Feb 21, 2013 7:02PM
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You all do realize that the government sets the level of minimum wage. The company that uses what is the law right or wrong is following the American dream. Maybe we can try to change the people in Washington!
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.
Feb 21, 2013 6:35PM
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I was a member of the Sam's club and I have to admit, I have never seen the low class scum shop there like they do the walmart retail stores. It's a much better shopping experience. And, you don't have to wait long in line either!
Feb 21, 2013 6:31PM
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Wal-Mart has consistently violated major labor laws and nobody is ever held accountable for this. We now live in a world that is comfortable with zero accountability. I am done shopping there. The only reason I do, is because I am the needy that Walmart is targeting, and they make it easy to buy anything you want for 35 percent of its marked retail price, but that's my only motivation for going there. I am so done hearing about how money is more important in this country than the way we treat our employees. Sooner or later, I am boycotting this place, and shopping at Target instead. Target has an excellent market of customers and they don't treat their customers like crap either. They hire nice people, and responsible managers. They don't finagle and they don't nickel and dime. Walmart is going to be the victim of its own demise.

Feb 21, 2013 6:29PM
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I don't shop there, I hate the place. It's so disgusting to have to be somewhere that panders to the most low class scum around, the trash that go into these stores is more than enough to make you want to vomit!  Lazy fat a...s...s  scum trolling around in the motorized carts because they are too lazy to stand and walk! You drove and walked your stupid a...s...s to the store, walk, lose that disgusting fat a..s...s! And dirty and stinking! Just no excuse for any of it.
Feb 21, 2013 6:22PM
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Our ****ing homo manager is said to be in the back rooms or office ****ing his boyfriend who also works the store as an (****)istant manager. Yeah, we all know whose a..s...s. is being assisted!
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!!!
Feb 21, 2013 6:17PM
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Have you seen these ooooooooollllllld ugly **** waltons who rake in the cash? My god, they are older than donkey s...h....i....t! They all are straddling the fence just waiting to fall head first into the six foot hole in the ground! Fugly ollllld people wearing expensive clothes and jewelry around their ugly old crepey necks! OMG, it's a picture out of a horror story!
Feb 21, 2013 6:10PM
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i will never even enter a walmart store! its been 20 years since i went in! i refuse to go. i live near a Aldi store and i seen a sign now hiring they pay 11 $ per hour! walmart pays 7.25 per hour. thats sad!
Feb 21, 2013 6:09PM
Feb 21, 2013 6:04PM
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All big box stores have product made from China, why does no one bring up Target, or Kmart because it is easy to attack the big dog.
Feb 21, 2013 5:51PM
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This is what you get when you want CHEAP!
Feb 21, 2013 5:39PM
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It's about time Sprawl-Mart was its own worst enemy; they have been the worst enemy of every town unfortunate enough to have one from the beginning! Phuckers.
Feb 21, 2013 5:38PM
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Walmart epitomizes American businesses in general.  It's business as usual, bend over and smile,  an environment where the worker is constantly buggered.  You have to check their pricing labels as well.  Walmart likes to change the prices but not the labels.  Even when the labels have been changed, they aren't necessarily correct, reporting lower price per ounce than actually being sold.  I recently pointed out that the the shelf price was for a 15 oz raisin box but the boxes were now only 12 oz.  Consequently the actual price was higher than advertised.  I've noticed this on several occasions.  I have no proof but I believe it to be a deliberate action.  You be the judge!
Feb 21, 2013 5:36PM
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 Bad service,cheap Chinese made crap products,employees and customers that look like drunks and crack addicts. Whats to like here????
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.
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 .  
Feb 21, 2013 5:29PM
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Wal-Mart is actually a fascinating company. This company has made huge profits by providing almost no customer service to shoppers. The day before Christmas my local Wal-Mart had 15 checkout registers and only 6 were open. Normal people would never stand for this. Wal-Mart can get people who actually hate the company to shop there regularly. The best answer for this is that everyone knows Wal-Mart has the cheapest goods possible and they will put up with anything to purchase them. People who hate Wal-Mart actually keep it in business. Wal-Mart is the only company on earth that can get by with this. They don't teach this in Business school!
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.
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