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.

By Charley Blaine Feb 15, 2013 4:35PM
© Carlos Barria/REUTERSUpdated: 4:40 p.m. ET.

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

Feb 15, 2013 7:09PM
One of the problems I see is that there are no employees to be found in the stores.  I was there today and when I went to check out there were only 3 registers open out of the whole front of the store.  People were lined up 6 deep at each of the 3.  1 lane was for 10 or less items and 1 was for 20 or less and the one that was a regular check out had a really long wait.
Feb 15, 2013 7:07PM
Well, I guess we are going to see plummeting sales in all 57 states now, terrible for obamascam, all these taxes were'nt supposed to hurt the little guy, but he's been to all 57 of them and he's there to help the meek and the weak, of course not exactly this week cause this weekend he's down in Florida getting in some golf lessons to tune up the old game, while the wife and kids are fling off to somewhere, man I am glad he is on top of things, even if it is on air force one. Does anyone know how much fuel this guy's burned to date? Now that would be some serious cash. Walmart, I guess you are on your own.
Feb 15, 2013 7:04PM
Also anyone notice as we're getting rid of unions and all those "evil" things that used to stand up for our jobs, and giving corporations more power, our livelihood is getting worse? Just a thought. Keep standing up for the corporate agenda.
Feb 15, 2013 7:03PM
 I can give one great example why their numbers are falling...their store managers DO NOT KNOW HOW TO MANAGE personnel.  Earlier this month I went to the Walmart near my home here in TX and it was around 9:45 or so.  It took me 45 minutes or more to check out!!  They had two registers open not including the self service ones, and only  50% of those were on.  They didn't bother to open any other registers until there were a dozen or more people in line with full carts.  I won't be going back if I can avoid it.  Stocking can be done at night not during the day.  Piss poor management at the Schertz, TX store.
Feb 15, 2013 7:03PM
Whose customers would likely be hurt more by the 2% increase in payroll tax withholding that returned on January 1st?  Hint: not Tiffiny and Co., or BMW .
Feb 15, 2013 7:00PM

"Delayed tax refunds"? I got my refund after 6 days, that's the fastest I ever remember getting it. I think corporate is blowing smoke. Also here's the thing with the stock market: they want the companies to grow and grow and grow and show bigger profits every quarter. Sooner or later there is going to be a plateau, that's why the smart stock traders bet against the market. Wal-mart isn't going bankrupt or anything. They're citing higher payroll taxes, are they citing the upper management's million-dollar salary too?

Feb 15, 2013 6:56PM
I hope the friggin place goes bankrupt and the rest of the GREEDY 1 percent
Feb 15, 2013 6:54PM
Whaaa, I am shedding a tear... NOT!
Feb 15, 2013 6:54PM
Heck with the GREEDY Walmart  I shope elsewheres whenever I can
Feb 15, 2013 6:52PM

I hate to tell you WalMart it is because of you not the payroll tax. If you go to Walmart here in Georgetown Texas on a Tuesday there is a total of six employees so if you need help forget it. That is the reason most in Georgetown go to Best Buy and Ross it is cheaper.


Sorry you need to blame yourself

Feb 15, 2013 6:52PM
BooHoo these people are the most selfish and dangerous to the USA. I read Chinamart costs taxpayers over a billion dollars in benefits paid to their employees due to poor pay, lack of hours so they live on the poverty level while this family makes billions. What exactly do people need from this junk store that cant be found in other stores or online with some shopping skills. The junk that goes out of their stores made in any asian country is unbelievable.  One large reason for the demise of decent jobs in this country, hope people wake up!
Feb 15, 2013 6:51PM
Its about time. with their terrible selections (only carry mostly blue ray  discs and only popular ones same with games their selection is pitiful), over the top prices,  dirty ghetto **** stores that make K-mart look like a nice place to visit and seriously rude and UNIFORMED AND UNHELPFUL  employees its about time this **** chain takes a hit. Realize that making people pay 10 bucks for a movie figure toy that has only 5 movie areas and 6 bucks for a 12 pack of soda is not going to win you any ****ng customers. I want wal mart to go bankrupt.
Feb 15, 2013 6:51PM
WalMart is a drag on our country.  They don't pay a living wage to millions of employees.  I won't shop there, there are other stores that treat their employees better!
Feb 15, 2013 6:47PM
I cannot stand to shop at any of our local Wal-marts. The workers are rude, the stores are trashy and the prices aren't that big a differance from our local food stores. The clothes are for teenagers and those who are a size 2 or smaller and very poorly made. Worst of all the my town use to have very little crime, with our new super Wal-mart opening 5 years ago, crime has risen 100%. No thanks! I would rather shop at Aldi's or the local farmer's market.
Feb 15, 2013 6:47PM

There`s some great Americans posting today.Hope for a depression.Maybe people would

be happy living in a 3rd world country.

Feb 15, 2013 6:45PM

Everybody slamming Walmart...........for what?   In reality they are an American success story. 3900 stores in the US alone,  1.6 million employees and 90% of all Americans live within fifteen miles of a Walmart. As a supermarket Walmart now sells more food than Kroger and Safeway combined, and keep in mind they did this in only fifteen years. During this same period, 31 big supermarket chains sought bankruptcy. Walmart now sells more food than any other store in the world.

The average Walmart "associate,"  makes $11.75 an hour, far more then the minimum wage.

So they had one bad month.....big deal, welcome to the wonderful world of retail.

Feb 15, 2013 6:42PM



 Wal-Mart came to be because of the want of a cheaper product by the consumer, but in order to have a product as cheap as those sold in the Wal-Mart stores one had to go out of the country.


Wal-Mart wasn't the first to leave American Made Products  but it was the biggest  and in doing so it

left millions without a way in which to earn a living, Mom and Pop stores closed by the thousands.


Now the tail has turned and there isn't enough work for those who live in the U.S. and people are not just fed up with the poor quality of foreign made products but also see the abuse of those who had to endure the poor quality in benefits' one gets when there isn't a "Collective Bargaining" "

force management has to deal with..


All across our Great Land there has been a shift in the "Want To Work State" laws that will reduce the rights of the worker and remove "Collective Bargaining" from the table when it comes to workers rights..


Wal-Mart's failure I hope is just the beginning of a turn-around that America must see in order to unite the workers of this Grate Land to take a stand on two issues..


First: For Now "Buy American Made Products and American Made Products ONLY"

American Made Products cost a little more but the quality surpasses all others..


Second: Collective Bargaining "We Will Die if We Don't Stand Together"

Look at the bonus a CEO receives from a company and then look at the way that

same company treats its workforce..

Feb 15, 2013 6:42PM
I don't shop at Wal-Mart because the lines are so long.  It takes longer to check out than it does to shop.  My time is money, too. 
Feb 15, 2013 6:39PM

If, and i doubt that it will happen, min wage goes to $9/hr, many of the small manufacturing firms I call on will layoff people, use temp labor, and abandon training programs designed to develop the skills  requied for pay raises. This isnt theory. I deal with them everyday and they already are planning to survive as a business entity at the cost of higher unemployment and investment in more automation requiring less labor.

Labor loses. 

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