The emails say February sales are off to the worst monthly start in seven years.
The executives attribute the dismal performance to the expiration of payroll tax cuts.
Bloomberg's Renee Dudley reports:
“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.”
“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?”
The stock just tanked on the news and is now down more than 3 percent in intraday trading. Click on the chart below to enlarge the image.
Brian Sozzi, chief equities analyst at NBG Productions and a specialist in retail stocks, told Business Insider:
The bigger story is that these emails got out. This doesn't happen to Wal-Mart. they have pre-recorded earnings calls – very structured. This is just abnormal in Wal-Mart's world. It's more common in the tech industry.
The barometer of the U.S. consumer if these emails are true reflects common sense: more retailers are researching major earnings warnings. There's no reason to be optimistic. The stock market is telling you to expect more.
On the other hand, Miller Tabak Chief Economic Strategist Andrew Wilkinson is skeptical. He wrote in an email following the leak:
While Wal-Mart’s discussion of same-store sales at the start of February is more current than the January retail sales report, we are a little suspicious of how deep the tremors will run from management’s leaked email.
There are two issues. First is the rise in payroll tax from 4.2 to 6.2% on incomes up to $113,000. January retail sales data reported earlier in the week did not show any major surprises – discretionary spending appeared to hold firm.
Second is the delay to tax refunds due to year-end complications from the fiscal cliff. The IRS delayed the filing process to the end of January and as a result early filers accustomed to receiving refund checks are running behind schedule this year. According to a one source, tax refunds this time one year ago were running at $19 billion.
Perhaps Wal-Mart didn’t sell as many flat-screen televisions in February as they did a year ago on account of delayed filings and subsequent delays to refund checks.
Earlier consumer confidence data seems to refute the view that households felt a massive amount of pain from the payroll tax increase. It was the current conditions index that rose back towards its November peak most. The outlook component lagged and perhaps reflects on the prolonged wait by consumers for payroll refunds.
Finally, there is one more issue to consider: gas prices. The cost of a gallon of gas has been rising steadily, and that is always a big headwind for the American consumer.
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