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Walmart Blames the Weather (And Other Things) for U.S. Sales Weakness

Will Walmart become a leader in the climate change dialogue? It's blaming "challenging weather conditions" as part of the reason it's U.S. sales for its first quarter of this year (three months ending April 30) were down 1.4 percent compared to last year. Walmart also points to the fact that last year had an additional day in the quarter due to leap year. This one day added 1.0 percent growth during the 2012 first quarter, according to the company's financial report. There's also commentary regarding a delay in tax refund checks, less grocery inflation than expected and the payroll tax increase to explain the U.S. sales situation.

Do not be sad for Walmart, however, their consolidated net sales (U.S., Sams Club and International) were up 1 percent. Their earnings per share is also up. The company made sure shareholders were happy, returning $3.8 billion during this quarter through dividends and share repurchases. That's $1727  for each of the 2.2 million associates employed by the company.

We here at the WMLP are going along with others who've examined the data more thoroughly than we have and say the economy has improved and many consumers believe they can afford to shop elsewhere. See one commentary by Matthew Yglesias at the web site Slate.com, titled "Is Wal-Mart in Trouble? How Amazon and the Strengthening Economy are Threatening the Once-Invincible Retail Giant," May 17, 2013.

We give these thoughts on the excuses claimed by Walmart:

1) Challenging weather conditions have happened pretty regularly in recent years. If there have been more bad weather days which have impacted the U.S. stores more than in other years, explain that. Something like "there were XX number of stores closed for XX days due to damage caused by weather events, with XX number of stores seeing noticeably reduced sales for XX days related to weather events," would look more legitimate.

2) Even if there was a delay in citizens receiving their income tax refunds at the beginning of the tax-filing season, by the end of April most would have received their refunds, particularly the lower income groups who have uncomplicated tax returns and often file early. The writer of this blog personally knows of a simple return mailed (yes, mailed) on April 1 with the refund being received on April 18.

3) Maybe we should allow Walmart to complain about a lack of inflation in grocery prices, but it is certain that Walmart's customers aren't complaining about it.

4) Certainly, the payroll tax increase (the employee share of Social Security tax was temporarily reduced by two percentage points and returned to it's regular rate of 6.2 percent in January), which was always expected to be returned to it's previous rate, should not have caught Walmart off-guard.

You can find Walmart's official press release by going here. It's titled "Walmart Reports a 4.6 percent increase in Q1 EPS of $1.14; U.S. businesses forecast positive comp sales for Q2."

 

Disclaimer Notice

The Wal-Mart Litigation Project has no affiliation with Wal-Mart (Walmart) itself.
The Wal-Mart Litigation Project is solely coordinated by Lewis L. Laska and has no affiliation with any other organization, institution or entity.
It has no affiliation with the company whose headquarters is in Bentonville, Arkansas and operates under the trade names Walmart,Wal-Mart, Wal-Mart Stores Inc., Wal-Mart Associates Inc., Wal-Mart Discount Stores, Wal-Mart Stores East, Inc., Sam's Club, Sam's Wholesale Club, Sam's Club Members Only, Sam's Club We Mean Business, Sam's Club Membership Warehouse for Business and other companies related to Wal-Mart, or Claims Management Inc., Wal-Mart's captive insurer.