On Friday, Wal-Mart’s (WMT) shares dipped 2.15 percent to close the day at $69.30 after Bloomberg reported on email exchanges in which the company’s Vice President for Finance and Logistics Jerry Murray (among others), was openly disparaging about the company’s poor January and February sales numbers.
Calling the most recent sales reports “a total disaster”, Murray noted that the start of February represented “The worst start to a month I have seen in my 7 years with the company”, and bemoaned the lack of customers and revenue. In another email obtained by Bloomberg, the company’s Vice President for U.S. Replenishment Cameron Geiger complained about January’s sales before asking: “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?”
The drop in sales has been attributed to a number of factors. First and foremost is the delay in the disbursement of tax refunds resulting from the fiscal cliff negotiations. The company estimates that nearly $20 billion more in refunds had been issued by this time last year. This is compacted by the expiration of payroll tax-cuts that have seen Americans paying 2 percent more in Social Security taxes up to their first $113,700 in income.
On January 29, the Consumer Confidence Board reported that all the gains made in 2012 were erased by the end of last month. According to the director of the board Lynn Franco, Americans are “more pessimistic about the economic outlook and, in particular, their financial situation.” The report went on to say that “The increase in the payroll tax has undoubtedly dampened consumers’ spirits and it may take a while for confidence to rebound and consumers to recover from their initial paycheck shock.”
While company emails discussed the end of the payroll tax-break and the delay in tax refunds as major causes of poor sales, the drop in the share price is clearly linked to Bloomberg’s report revealing the negative attitude that is currently prevailing in the upper levels of the company’s management.