2/15/2013 8:35 PM ET|
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.
More on moneyNOW
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.
While incompetent bosses like Michael Scott and Andy Bernard typically can’t survive in the workplace, office romances are a very real part of corporate culture.
- Southwest Airlines turns less legroom into $773M
- 'American Idol' gets sorry ratings for season finale
- Powerball's wacky sense of humor
- Millions of Facebook's users are actually pets
- Can crowd funding rescue the LA Times?
- Domino's debuts a DVD that smells like pizza
- Average US retirement age climbs to 61
- McDonald's aims to slim down its 145-item menu
- Bathroom reading goes digital with iPad TP stand
[BRIEFING.COM] The S&P 500 ended this week with a bang, roaring to a new all-time high on the back of stronger-than-expected economic data, influential leadership, and an ongoing appreciation for the Fed's monetary policy support.
The bullish bias was evident in premarket action as the S&P futures pointed to a higher start without the benefit of any definitive news catalyst. Stocks indeed benefited from a blast of buying interest at the opening bell on this ... More
More Market News
All hail the bull market, which ended the week with a big rally. But it also is starting to look a little like 1987, which suffered an epic blow-out.