Those Walmart E-mails and the U.S. Economy

By:  Bob Adelmann
Those Walmart E-mails and the U.S. Economy

The Wall Street Journal's conclusion that Walmart's slow start at the beginning of the year was a harbinger for the balance of 2013 has just been proven premature by Walmart's remarkable year-end financial results.

Much was made of some internal e-mails from Cameron Eiger, a Walmart VP, expressing his frustration over slow sales at the start of the year. In a February 1 e-mail to company executives, he wrote: “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?”

These were followed up by Jerry Murray, Walmart’s VP of finance who wrote in an internal e-mail on February 12: “In case you haven’t seen a sales report these days, February MTD [month-to-date] sales are a total disaster. [They are] the worst start to a month I have seen in my 7 years with the company.”

Part of the decline was expected, due to the rise in payroll taxes of two percent that reinstated the full deduction effective on January 1. Part was not: Delays in tax refund checks as the IRS struggled with last-minute changes to the code following the fiscal cliff agreement on December 31. That amounted to about $20 billion not going to Walmart’s customers that their executives were counting on to make their month.

The Wall Street Journal jumped on those e-mails as an indication of a general slowing of the economy being reflected by the world’s largest retailer. The Journal noted that the various headwinds faced by the company, and the American economy by implication, included the expiration of the payroll-tax cuts which continue to extract about $80 a month out of Walmart’s customers’ paychecks. Also was the rising price of gasoline, with a gallon of gas in some parts of the country exceeding $4 a gallon for regular unleaded. And food price increases are putting Walmart in a difficult position as well. The U.S. Department of Agriculture estimates that groceries will cost three to four percent more this year than last, and half of Walmart’s revenues come from groceries.

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