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.
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"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?
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
There`s some great Americans posting today.Hope for a depression.Maybe people would
be happy living in a 3rd world country.
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.
A BETTER DAY IS COMING
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..
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