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Market Minute: Walmart Blames Taxes for February Sales 'Disaster'

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Walmart (WMT) acknowledged its sluggish February sales in its fourth-quarter earnings release this morning, but blamed its woes largely on tax issues.

The fourth quarter itself -- which ended January 31 -- was a mixed bag for the retail giant. While earnings topped estimates, its net sales for the quarter were $127.1 billion, about $1.7 billion lower than expected. And same-store sales rose just 1% for the quarter.

But the big story going into the report was that February sales "disaster."

Earlier this month, internal emails acquired by Bloomberg showed Walmart executives in a state of panic over the slow start to the month. One executive, Walmart vice president Jerry Murray, called the sales figures a "total disaster" and said they were the worst he'd seen to start a month in about seven years.

Walmart earningsThe revelation sent Walmart's stock plummeting and analysts hunting for explanations, and many had pointed to taxes as the culprit. The expiration of the payroll tax holiday had already slowed retail sales in January, and it was expected that Walmart would be affected. Some analysts further pointed out that an expected delay of tax refunds due to Congress' last-minute deal on the fiscal cliff could have left shoppers with less money in their pockets this month than usual.

As it turns out, Walmart has decided to blame both tax issues for its slow start this year.

In the earnings report Thursday morning, the company projected that flat growth would continue through April, and said that it would "continue to monitor economic conditions that can impact our sales, such as rising fuel prices, changes in inflation and the payroll tax increase."

And it fingered tax-refund delays as the main culprit for those dismal February numbers.

"February sales started slower than planned, due in large part, to the delay in income tax refunds," the company writes. "We began seeing increased tax refund check activity late last week in our stores, resulting in a more normalized weekly sales pattern for this time of the year."

In other words, now that the refund checks are starting to flow, customers are finally coming in to Walmart spend their annual IRS windfalls.

Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.

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Jerry

This is very strange. A company that sells most of it's products made in China. They can't understand why their unemployed American customers don't have money to buy their cheap goods. Maybe they should close down in the USA and move all it's stores to China. They will have the money to buy these cheap Chinese goods.

February 25 2013 at 12:06 AM Report abuse rate up rate down Reply
clv99999

Walmart--wake up--your "super stores" are anything but Super. For the sophisticated inventory system that you are supposed to have you are out of stock in Palm Desert, Ca much of the time. Further what stocking is done is done during the day, rather than at night or at slow times, which blocks the aisles. I have written several times to coporate complaining about the management of this store to no avail. There are also very few registers open, unless you make a fuss. That's where a lot of your profits have gone Walmart--wake up--this isn;t the type of store that the Waltons or Sam Walton would have been proud.

February 24 2013 at 1:28 AM Report abuse rate up rate down Reply
Dick

This is Pay back for what they have done to small businesses all over America!!! They want you to beleive that they are the lowest cost for shopping ....... which is a load of crap!! They think they have a monoply on retail shopping and put out all these propaganda ads trying to convince people! They contribute nothing to the local communities they put these big stores in, they just suck the dollars out of them and ruin all the small business in those towns. Sam Walton is turning over in his grave the way these greedy corporate peope has ruined his dream...shame on you WalMart!!!

February 22 2013 at 2:45 PM Report abuse rate up rate down Reply
MICRON TOOL

Welcome to the real world walmart....how many super stores did you build last year

February 22 2013 at 2:21 PM Report abuse rate up rate down Reply
arenadood

This is not just happening at Wallyworld, almost any business down to small Mom and Pop stores are feeling the same thing.

February 22 2013 at 11:14 AM Report abuse +1 rate up rate down Reply
cheekweld

When Sam Walton was alive he was proud to say Walmart had a Buy American first policy. Since his death the CEO has done everything he could to buy foreign. Then on top of that they way they treat their employees is a disgrace. Unlell it is an emergency I will not but from Walmart. I even switched from Sam's to Costco.

February 22 2013 at 10:34 AM Report abuse rate up rate down Reply
dugerman85

Maybe they can cut workers wages to make up the difference... oh, wait a minute they are already at minimum wage. Well, the Walton's can always spend millions to lobby GOP members of congress to lower the minimum - the government can make up the difference with food stamps. Oh, no that's right the food stamp program is going to be cut too. This is very sad for the Walton family - I just hope they can survive.

February 22 2013 at 9:56 AM Report abuse rate up rate down Reply
The Wise One

Walmart can blame the tax issue for slow sales from now until the cows come home to roost. The FACT is that shoppers are becoming increasingly aware that Walmart DOES NOT offer the lowest prices as they falsely continue to claim in their 'every day low prices' propaganda advertising. Additionally, the quality of their fresh merchandise is simply sub-par - some would say appalling - compared to that offered by other grocery chains. Finally, the moves that Walmart executives have taken with regards to their in store associates pertaining to the elimination of insurance coverage and drastic cut backs in weekly hours for their associates have rendered the morale of these employees almost non-existent. A smiling and satisfied Walmart associate is something of a dying breed and shoppers are not at all happy with all of these long, sad faces which they perceive as a complete lack of proactive customer service, which - in fact - it is.

February 22 2013 at 9:46 AM Report abuse rate up rate down Reply
moudsie

OMG--the poor Walton family -- can't we do a telethon for them! And here I was thinking they were cheap and didn't want to pay their help -- and it seems lately, (the last 6 months) I go in for something and it's out of stock (Puffs with lotion) -- sometimes the shelves are bare in areas -- and I found the local supermarket is a bit cheaper on a lot of items--yet they are building a "super Walmart" a couple of miles up the road so they can now sell food (I wouldn't buy any meat or produce for sure).

February 22 2013 at 9:09 AM Report abuse rate up rate down Reply
suggarmaggnollia

Ridiculous. The delayed refund is a myth of epic proportions. I e-filed my itemized deduction return the first week of February and had my refund in 10 days. That's even faster than the last 2 years. The payroll tax issue is different because on average, it amounts to about $30 a pay check less money. For the average walmart shopper, that's not an insignificant amount of money. However, I think Walmart has bigger issues than the slightly smaller paychecks of their customers.

February 22 2013 at 9:06 AM Report abuse +1 rate up rate down Reply