Four days ago, I did a post on major national retailers like J.C.Penney, Sears, and Best Buy that will close stores in 2013. Here’s more evidence that there’s no economic recovery and that the POS is making the economy worse.
Executives at Wal-Mart are worried about poor sales this month — the worst in seven years. They attribute the poor sales to shoppers being hit by Obama taxes, an increase in the jobless rate, and an anemic economy. The US economy actually had a negative growth rate of -0.1% in the last quarter of 2012!
Renee Dudley reports for Bloomberg, Feb 15, 2013, that internal e-mails obtained by Bloomberg News indicate that Wal-Mart Stores Inc. had the worst sales start to a month in seven years as payroll-tax increases hit shoppers already battling a slow economy.
Jerry Murray, Wal- Mart’s vice president of finance and logistics, said in a Feb. 12 e-mail to other executives, referring to month-to-date (MTD) sales: “In case you haven’t seen a sales report these days, February MTD sales are a total disaster. The worst start to a month I have seen in my ~7 years with the company.”
Wal-Mart and discounters such as Family Dollar Stores Inc. are bracing for a rise in the payroll tax to take a bigger bite from the paychecks of shoppers already dealing with elevated unemployment. The world’s largest retailer’s struggles come after executives expected 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.
Murray’s comments about February sales follow disappointing results from January, a month that Cameron Geiger, senior vice president of Wal-Mart U.S. Replenishment, said he was relieved to see end, according to a separate internal e-mail obtained by Bloomberg News.
In a Feb. 1 e-mail to executives, Geiger asked: “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? Well, we just had one of those weeks here at Walmart U.S. Where are all the customers? And where’s their money?”
Both executives, Murray and Geiger, attributed the performance to increased payroll taxes and delayed tax returns, which Geiger called “a potent one-two punch,” according to the e-mails.
About $19.7 billion more in tax refunds had been delivered to shoppers by this time last year, according to an analysis prepared by Wal-Mart’s Global Customer Insights & Analytics division that was attached to Murray’s e-mail on Feb. 12. The retailer expected returns to be delayed by three to four weeks because of the late release of tax forms and additional, federally mandated tax-fraud scrutiny.
When a payroll-tax break expired Dec. 31, Americans began paying 2 percentage points more in Social Security taxes on their first $113,700 in wages. For a person making $40,000 a year, that is about $15 a week.
The extra tax bite is about equal to a year of car insurance for a family making $30,000 or a basket of groceries per month for a family making $50,000, according to Wal-Mart’s analysis.
Other retailers who court low-income Americans also are bracing for the rising taxes.
Higher payroll taxes “go against our customers’ wallet,” Family Dollar Chief Executive Officer Howard Levine said on a Jan. 3 conference call. “Clearly, they do not have as much for discretionary purchases than they did.”
At a Feb. 1 officers meeting (the minutes of which were attached to Geiger’s e-mail), Wal-Mart U.S. CEO Bill Simon cited negative economic growth, declining consumer confidence and rising unemployment as challenges facing the company. The U.S. economy shrank at a 0.1% annual rate in the fourth quarter, and the unemployment rate rose 0.1% to 7.9% in January. The Conference Board’s measure of consumer confidence declined last month to the lowest since November 2011.
Even with a slow January, however, Wal-Mart is gaining market share steadily, Simon said. “That points to our competitive landscape, which means everyone is suffering and probably worse than we are. We have to fight against the tougher economic environment to earn a bigger share of a smaller consumer spending pie.”
Wal-Mart fell 3.3% to $68.46 at 2:12 p.m. in New York and earlier slid as much as 3.8% for the biggest intraday decline since Nov. 15. The shares rose 14% in the 12 months through yesterday, compared with an 8.5% gain for the Dow Jones Industrial Average.
Wal-Mart spokesman David Tovar said in an interview: “As with any organization, we often see internal communications that are not entirely accurate, that lack the proper context and represent individual opinions.”
Elections have consequences!!!
- “8+ million dropped out of U.S. labor force under Obama,” Jan. 26, 2013.
- “List of company layoffs under the Obama regime,” Jan. 21, 2013.
- “General Motors is becoming China Motors,” Jan. 15, 2013.
- “America’s scary retirement numbers,” Dec. 10, 2012.
- “Made in America – Blue Collar Skills Not Taught Anymore,” Dec. 3, 2012.
- “Unsustainable! 51% of Americans pay no federal income taxes!,” July 16, 2012.
- “America is in a Depression, not a Recession,” June 5, 2012.