Despite all of the things going against Walmart, never once do they consider people are waking up to their business model. Instead, they point the finger at everybody but themselves.
This post originally appeared at Occupy Democrats
By Salvatore Aversa
Walmart released their quarterly report today, and it fell short of analyst predictions.
Despite missing their mark, Walmart’s profit increased 1.3% to $4.07 billion for the quarter. Their sales also increased 2.4% to $116.2 billion. However, the important measure, Walmart’s same-store sales, a statistic used in retail industry analysis that compares the sales of stores that have been open for at least one year, dropped .3%. Analyst’s expected a .7% to 1% gain.
Today’s report also lowered its full-year profit and earnings guidance, as Walmart continues to try to navigate turbulent economic waters. Walmart’s stock(WMT), as of closing, had slipped down to $74.41 a share, -2.60%.
Walmart was not alone in its missed estimates. Macy’s missed their expectations, a first in 25 quarters, and also lowered their earnings guidance. Kohl’s also failed to reach their prediction.
Walmart CEO Mike Duke said in a recording, “The retail environment was challenging across all of our markets.”
The poor economic reports suggest that, while unemployment continues to drop, many are not confident enough in the market to start spending again. Consumers visiting stores dropped .5% in the quarter. Although visits to stores dropped, Walmart’s results come just one week after US retailers reported modest gains. Retailers had to place bargains to attract frugal customers to their establishments.
Walmart placed the blame on the expiration of the payroll tax cuts in January, raising food prices due to inflation, and, according to Walmart’s CFO Charles M. Holley, Jr. “a general reluctance of customers to spend on discretionary items right now.”
Other factors are the increased gas prices due to tensions in the Middle East and a slow employment recovery.
Departments that have discretionary items, such as entertainment, seasonal goods and other goods, like sports equipment and craft supplies posted negative comparable sales.
“The consumer doesn’t quite have the discretionary income, or they’re hesitant to spend what they do have,” Mr. Holley said.
Not all departments of Walmart underperformed. Executives stated that their home, apparel and produce departments have all done well. The increased business in produce is especially important for Walmart, as their have been problems with the quality and freshness of their products.
The United States was not the only place that posted poor sales. Walmart’s international market, until recently, had previously been growing at a fast rate. Now, Canada, Mexico, Japan and other countries all posted poor earnings; only 2.9%, or $33 billion.
“It forecast flat U.S. same-store sales in the current quarter, which includes the back-to-school season. Back-to-school is often seen as a barometer for the holiday period, when retailers get about 30 percent of sales and 40 percent of profits.“
“We’ve seen customers both in mature and emerging markets curb their spending. We believe that environment is going to remain through the end of the year,” said C. Douglas McMillon, chief executive of Wal-Mart International.
Walmart is expecting net sales of 2 to 3 percent growth for the entire year. They were expecting between 5 and 6 percent growth. It also lowered its share price gains, from $5.20 to $5.40 down to $5.10 to $5.30 a share. That may seem like a little difference, but multiply it by over 3 billion shares, and it adds up.
Then there is the elephant in the room. In April 2012, the New York Times wrote an exposé on Walmart. In it, they revealed that Walmart was bribing officials to obtain permits to build faster in order to gain dominance, and top executives in the United States Walmart helped to cover it up. And, while it began with Mexico, the bribery investigation has since expanded to China, India and Brazil.
“Wal-Mart dispatched investigators to Mexico City, and within days they unearthed evidence of widespread bribery. They found a paper trail of hundreds of suspect payments totaling more than $24 million. They also found documents showing that Wal-Mart de Mexico’s top executives not only knew about the payments, but had taken steps to conceal them from Wal-Mart’s headquarters in Bentonville, Ark. In a confidential report to his superiors, Wal-Mart’s lead investigator, a former F.B.I. special agent, summed up their initial findings this way: “There is reasonable suspicion to believe that Mexican and USA laws have been violated.”
In the second quarter, Wal-Mart spent $82 million, more than they expected to spend, to comply with the Foreign Corrupt Practices Act. Without those expenses, their corporate expenses would have decreased 2.2%, according to Walmart. They had expected to pay between $65 and $70 million.
Despite their mistreatment of employees, not wanting to provide benefits, low wages, bribing officials and breaking laws…both federal and ethical. Despite sweatshops in China, and forcing their suppliers to cut labor to keep their prices low. Despite forcing some companies to take their business overseas so they could continue to supply Walmart with cheap products.
Despite all of the things going against Walmart, never once do they consider people are waking up to their business model. Instead, they put the blame on the economy, which is improving, they put the blame on the government for catching them in their bribery scheme. They point the finger at everybody, but themselves. Maybe it is time they take some Republican advice, and take personal responsibility. All we can do is hope that Walmart falls. It is time we go back to the mom and pop shops, and get away from these multinational conglomerates that pretend they are operating in our best interest with low prices, but really they are harming us simply by existing.
Photo: AP File/Lisa Poole