Wal-Mart Blames Economy And Payroll Taxes For Slowed Earnings | WAMU 88.5 - American University Radio

NPR : News

Filed Under:

Wal-Mart Blames Economy And Payroll Taxes For Slowed Earnings

Wal-Mart is blaming depressed demand amid a still-shaky economy and a rise in payroll taxes for disappointing earnings in the quarter ending July 31.

The world's largest retailer said Thursday that its net income rose to $4.07 billion, barely above the $4.02 billion it earned in the same quarter last year.

According to Reuters, sales at U.S. stores that have been open for at least one year fell 0.3 percent.

"The retail environment was challenging across all of our markets," Wal-Mart President and CEO Mike Duke said on a conference call.

Bloomberg reports:

"Wal-Mart's sales have been hampered this year by a 2 percentage point increase in Social Security taxes that has reduced spending among its shoppers, many of whom live paycheck to paycheck. Jerry Murray, a former vice president of finance and logistics at the retailer, said in a February e-mail obtained by Bloomberg News that the sales that month had been a 'total disaster.'

" 'The 2 percent payroll tax increase continues to impact our customer,' Bill Simon, Wal-Mart's U.S. president and CEO, said in today's statement. The company also expected sales to be helped by rising grocery prices, which didn't occur in a 'meaningful way,' he said."

The increase in Social Security taxes went into effect at the first of the year after Congress let a 2009 cut — aimed at economic stimulus — expire.

The company expects net sales to increase by 2 to 3 percent instead of the 5 to 6 percent it had earlier forecast.

Meanwhile, sales at the company's international stores also decreased 2.9 percent to $33 billion.

Wal-Mart blamed "significant ongoing headwinds" related to currency exchange rates. It now expects international annual sales to rise by only 3 percent instead of the 6 percent increase it had previously forecast.

Update At 12:00 noon ET: Market Reaction

In morning trading, the news on the Arkansas-based retailer sent the company's shares down some 2 percent and help spur broader pessimism on Wall Street about the health of the economy. The Dow Jones Industrial Average tumbled more than 200 points in the first hours of trading.

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

NPR

An 'Epilogue' That Makes Sense Of The Chaos Of Memory

In his episodic memoir, Will Boast meets the siblings he never knew while navigating family deaths and secrets. Critic Ellah Allfrey finds Epilogue conceptually ambitious, but lacking in execution.
NPR

Giving Chickens Bacteria ... To Keep Them Antibiotic-Free

What does it take to get chickens off antibiotics? According to Perdue Farms, an added dose of the "good bacteria" known as probiotics can help crowd out the harmful microbes that make a chicken sick.
NPR

Why Did Congress Kick The Can On Funding Islamic State Mission?

The president got approval for his plan to train and equip Syrian opposition fighters, but lawmakers didn't approve funds to pay for it or the broader air campaign.
NPR

Some Tech Firms Capitalize On Privacy

Steve Henn of NPR's Planet Money team profiles some entrepreneurs who are working on a novel business model to start up a new tech company. It's pay for service. What a concept.

Leave a Comment

Help keep the conversation civil. Please refer to our Terms of Use and Code of Conduct before posting your comments.