Bloomberg's Exposure of Worried Walmart Emails Stays Mostly in the Business Pages
On Friday, Renee Dudley at Bloomberg News exposed the contents of February 12 internal emails revealing that Walmart executives are worried -- very worried -- about sales during the first 10 to 14 days of the its most current fiscal period (mostly likely either the first 10 days of February if the company works with calendar months, or 14 days if it began the second period of the fiscal year on Monday January 28).
Their primary concerns are the payroll tax hike and delayed tax refunds, but they may also need to start worrying about higher gas prices (bolds are mine):
Wal-Mart Executives Sweat Slow February Start in E-Mails
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, according to internal e-mails obtained by Bloomberg News.
“In case you haven’t seen a sales report these days, February MTD sales are a total disaster,” 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 sales. “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.
“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?” Geiger asked in a Feb. 1 e-mail to executives. “Well, we just had one of those weeks here at Walmart U.S. Where are all the customers? And where’s their money?”
... 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.
The February pullback may also have something to do with gas prices, which began rising on January 21 and have done so for the past 27 straight days. The national average for regular gas is now 3.68 per gallon. In Cincinnati and Ohio as a whole, it's well over 3.80, and still rising, as of 7:30 p.m. ET. A sixty-cent rise in gas prices costs a two-car family driving a combined 500 miles a week and averaging 25 miles per gallon about $50 per month. If gas hits $4, the impact will be roughly equal to the impact of the payroll tax hike on a family with a gross annual income of $40,000. The weather was also a probably factor in the Northeast, where the winter storm nicknamed "Nemo" hit on February 9.
What Bloomberg reported barely news at the Associated Press, aka the Administration's Press. A search on the company's name at the AP's national site returned one item about Friday's results in the stock market:
Walmart was the biggest decliner in the Dow Friday. The stock fell $1.52, or 2.2 percent, to $69.30 after Bloomberg News published excerpts from an internal e-mail that said sales in February were a "total disaster." The retailer, which reports earnings next week, said that sometimes internal communications lacked "proper context" and "are not entirely accurate."
Notably lacking is the specific reference to anything relating to the "worst in seven years" -- which, by the way, is referring to 2006, over two years before the recession as normal people define it began -- or any general attempt to estimate an impact on the economy as a whole. Perhaps one could argue that it's not the press's place to interpret what Bloomberg exposed, but such constraints didn't matter to Christopher Rugaber at the Associated Press when he called the January jobs report showing unemployment rising and job creation mediocre "mostly encouraging."
A Google News search on "Walmart February sales" (not in quotes) returned 69 relevant items, Many of them contained the short AP passage quoted above. The vast majority of anything resembling extended treatment came from business publications.
Somehow, I think that if a Republican or conservative occupied the White House, we'd be hearing a lot more about the larger implications of the downbeat news from Walmart so far this year.
Cross-posted at BizzyBlog.com.