Wal-Mart says Obamacare may hurt sales

The company hints that the Affordable Care Act could be yet another reason business is down.

By MSN Money Partner Nov 18, 2013 1:59PM

Walmart plastic shopping bags in shopping cart
© ParryGrab/AlamyBy Shelly Banjo, The Wall Street Journal

Wal-Mart Stores (WMT) has a long list of reasons its customers aren't spending as much as hoped: the expiration of the payroll tax cut in January, the November rollback of food stamp benefits, and continued uncertainty in Washington, D.C.

Now the world's largest retailer is hinting at a new one: the looming individual mandate to buy health insurance under the Affordable Care Act.

The company attributed a third consecutive drop in U.S. comparable-store sales to a laundry list of macroeconomic headwinds when it reported earnings last week. Wal-Mart, which forecast continued gloominess through year's end, told analysts it would watch to see if the federal health care law would take yet another chunk out of customers' pocketbooks.

"While it is not coming through in customer research, we do know that some of our customers are concerned about the impact of the Affordable Care Act," Carol Schumacher, vice president of investor relations, told analysts on Thursday. "For many of our customers, having to afford health care and insurance may be another line item in their personal budget that they may not have had to cover previously." Wal-Mart says it has 140 million customers a week.

True Value Co., the hardware store cooperative with 4,600 locations, was more emphatic about the potential impact.

"This has been a massive concern for us," True Value Chief Executive John Hartmann said Friday. "Discretionary spending will certainly be impacted by the changes in the contribution Americans will have to make for health care."

Companies and their top executives haven't been shy about complaining about the financial and administrative burdens of the health care overhaul. But it is rare for them to draw a connection to their sales prospects.

The 2010 health law is expected to reduce the number of uninsured Americans by 25 million over the next decade, according to the Congressional Budget Office, though many will be covered by Medicaid rather than by having to pay for private insurance, if their income is low enough.

Starting on Jan. 1, most Americans will be required to carry insurance or pay a penalty that starts at $95 a year, or 1% of taxable income, whichever is greater. The penalty goes up in subsequent years. By 2016, it will be $695 for each adult, or 2.5% of a person's taxable income.

It is hard to tell how those costs might affect retailers. Many people are already covered by employer plans and won't be affected. People earning up to just above the poverty level in most states will be able to enroll in Medicaid, the federal and state funded health-care program for the poor.

For others, the effect on their pocketbooks will be defrayed by government subsidies. Insurance costs will be reduced by a sliding scale of government subsidies for people earning up to 400% of the federal poverty level.

Still, Wal-Mart has been signaling to investors that it could feel a pinch.

Bill Simon, president of Wal-Mart U.S., hinted at an investor conference last month that the process and cost of signing up for care could be a further weight on customers who already were weathering the 2% hit to their paychecks from the expiration of the payroll tax cut.

At the time, the government's health-care exchanges were two weeks into their troubled rollout, and Mr. Simon pointed to "the uncertainty in health-care costs as people still figure out how to register and what their costs are going to be."

Louise Radnofsky contributed to this article.

More from The Wall Street Journal

Nov 18, 2013 2:22PM

Nov 18, 2013 2:31PM
Just wait  - obama has more coming - America will not recover anytime soon from this radical.
Nov 18, 2013 2:33PM
It's not only hurting Walmart, it's hurting the whole country, well, at least the hardworking, taxpaying American.....probably not so much for the deadbeats who are on the government dole anyway, just one more benefit the rest of us get to pay for.  Looks like it will self implode, the question is will his ego recognize that his plan was a disaster or will he just throw more of our tax money at it to ensure the illegals and deadbeats continue to vote democratic.
Nov 18, 2013 2:28PM
What ?   The Obamacare agenda was pushed ahead of people having food ?

I would think that even by the customary delusional progressive standards this would be incompetent.   Well --- not if your goal is power and control at the expense of actual well being.
Nov 18, 2013 2:33PM
Time for you liberals to get a good dose of your hope and change! Open wide! 
Nov 18, 2013 2:31PM
Seriously what doesn't this guy screw up? Oh and has anyone one seen Michele? LOL the queen is silent!
Nov 18, 2013 2:37PM
Now that I have finished Open Enrollment I know that my contribution will go up about $70.00 per pay. The plan administrator advised that about $48 is Obamacare.  Also, I cannot have as much tax deferred money taken from my check to pay for out of pocket medical expenses. This will cost me another $625.00 per year. So, all in all, Affordable Health Care will cost me about $1,873.00 more per year.  That money has to come from somewhere.  Wal Mart will be some of it.
Nov 18, 2013 2:49PM
Look for a serious change in the Senate after the mid-term eletions.
Nov 18, 2013 2:44PM
Obama and Obamacare are hurting every thing and every body.  Impeach!
Nov 18, 2013 2:46PM
simple answer,  yes is effecting walmart.  heck the ACA (obamacare) law is destroying businesses all over  big and small.  people getting sticker shock when they can finally get a price. then losing their care due to the law.  with very few exceptons the law is destructive to all business and most people.   never should have been signed or passed.  at least I was not dumb enough to vote for obama or anyone who voted for this law.. were you?
Nov 18, 2013 3:14PM

I am really worried about this country. We can't fix our infrastructure and what have we built of any value or real expertise in the last 20 years? The rest of the world is passing us by and making progress. We sit here in political turmoil.
Nov 18, 2013 2:57PM

Oh one more thing: Richard Nixon is a choir boy compared to Obama. Nixon only bugged a hotel room; Obama bugged the whole world.


Maybe I should have listened to my dad to become a 'plumber' ! ;-)

Nov 18, 2013 2:54PM

With people worried about health care this year, You're going to see big , big discounts in retail to try & get you in the door. This 'liar in Chief' has really screwed the so called recovery this time- with only 2% growth? While I'm very pleased with the markets performance lately, I fear that the seasonal retail sales this year will be a big drag on a already anemic recovery.


One very serious point to note: Why isn't anyone screaming that the ACA web site clearly violates the HIPPA law's ? (these make it ILLEGAL to store and/or share ANY personal health information on a unprotected/ unencrypted site.)

Nov 18, 2013 6:41PM

.....so far I have met ZERO people that welcome Obamacare.......................


All part of obama's plan to socialize the United States. 126 MILLION wage earners will pay more for their insurance, so that 25 MILLION of the obama constituents get their healthcare FREE or very close to it.


That is the bottomline of ACA!!


Vote GOP and get a Senate Majority in 2014 - and then defund this nightmare!!!

Nov 18, 2013 2:22PM

oh no people won't get as much in foodstamps to spend at Walmart bankrolling the Walton family and Chinese suppliers... so bad for walmart...


Nov 18, 2013 2:45PM
Now let me try to understand Walmart's plight. They are under the impression since their sales are down it must be the forthcoming Obamacare that their customers have to pay in the coming year. OK, let us assume they are correct. Now let me try to understand Costco's plight. They pay about $12.00 dollars plus to a new employee, offer a very good healthcare plan and paid holidays. Now under the same assumption it must be the forthcoming Obamacare that their customers have to pay in the coming year is the reason Costco's sales have INCREASED almost 15% this year. See folks the Walton clan is nothing like it's founder, they rape everybody to be billionaires however the gentleman who founded Costco retired recently making under a half million a year in salary. Amazing, do yah think? 
Nov 18, 2013 2:52PM
Wow, the food stamp kings' policies are going to effect the largest foodstamp employer. Such a travesty.
Nov 18, 2013 2:51PM
Or maybe people just don't like to shop at Walmart.
Nov 18, 2013 2:38PM
Daddy4, the reason we haven't seen the queen Michelle in the last couple of months is she's been on line trying to sign up for ObamaCare.  We won't be seeing her for quite a while.  Hopefully her new coverage will cover her for new dental work to get rid of the horse teeth..
Nov 18, 2013 2:49PM
Let's put the blame where it's due - prices are going up, but our incomes are stagnant. And only   shortsighted people would put the blame on  Obamacare. Most of Walmart's  customers are  either already on medicaid/ medicare, or can't  afford  and won't  buy mandated insurance. How many of you would rush to buy insurance before food ( or even a cell phone)?
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