Wal-Mart Accidentally Lowers the Bar

 | Feb 19, 2013 | 1:00 PM EST  | Comments
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

wmt

,

dg

,

fdo

Retail earnings season was just getting warmed up when Wal-Mart (WMT) dropped its own rogue meteorite late Friday afternoon. According to an internal company email obtained by Bloomberg, February sales to date are "a total disaster," according to the company vice president who is responsible for logistics and finance. The executive also described this February as the worst start to a month he has seen in his seven years with the discounter.

And those internal emails are not only pointing fingers at February. Another executive sent an email dated Feb. 1 asking, "Where are all the customers? And where is all their money?"

Enter the damage-control machine. A Wal-Mart spokesperson suggested that internal emails might not be totally accurate and might include opinions or be taken out of context. Call me crazy, but I would take these alarm-ringing emails seriously any day of the week.

If you had been following the trail of breadcrumbs at Wal-Mart, you might not be completely surprised at the executive's revelations. Let's rewind the tape.

  • In mid-December, CEO Mike Duke suggested that 75% of consumers were aware of the fiscal cliff, and 15% of that group said they would curb holiday spending. Next stop: the debt-ceiling debate.
  • Dollar stores have been warning us about price competition since October, when outright price decreases started showing up in ads. Dollar General (DG) was the first to suggest it will protect unit growth by investing in price. Yes, that is bad for Wal-Mart, the everyday-low-price leader.
  • Family Dollar's (FDO) comps in December decelerated to 2.5% from high single digits in previous months
  • We all know about the payroll tax hike this year that will deliver a $1,000 hit to households that make $50,000 or more per year. Many retailers' January same-store sales were strong enough that they could brush this under the rug, but maybe it just took a little longer for the bi-monthly paycheck hit to sink in

Wal-Mart reports earnings before the open on Thursday. The good news is that this runaway email has set the bar low not only for Wal-Mart but also for retail in general. And that just confirms the already low expectations for initial retail guidance for 2013.

Columnist Conversations

Despite the market being down, the day has been dreadfully slow with about the only interesting stock being AM...
Shares of SWFT are taking a major beating today. The trucking company is off over 15% on extremely heavy ...
The SMH gapped below support this morning and now the DJIA is testing the uptrend line of a nearly six month r...
El Pollo Loco (LOCO) debuted at the top of its range ($15) and then popped to more than $19 in early open mark...

BEST IDEAS

REAL MONEY'S BEST IDEAS

Columnist Tweets

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.