Fat Fingers Back at Wal-Mart

 | Sep 25, 2013 | 5:03 PM EDT
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So, another fat finger at Wal-Mart (WMT) tells us what we already suspected. We are having a déjà vu. Once again, an e-mail surfaces from a Wal-Mart employee suggesting sales are not so good.

Recall that in February a fat finger at WMT sent out an e-mail suggesting sales were a disaster. Sure enough, despite management attempts at damage control, the following quarter was not so good.

While Wal-Mart has come out saying the current report is "completely false," I am not sure how anyone who tuned into Q2 retail earnings could possibly believe retailers have anything good to tell us about Q3.

Let's review the facts. In Q2 retailers all agreed on one thing: traffic hit a wall. Yes, that includes WMT too, as the retailer experienced a 50 bps decline in traffic trends. Hey, there is one bright spot. It wasn't as bad as the traffic jam in Q1, which saw trends down 180 bps.

Here are a few more problems to throw in the mix for H2:

  1. Food inflation is no longer helping that comp.
  2. The holiday selling season is six days shorter this year. Macy's (M) thinks that may create a sense of urgency to shop, but I'm not going to bet the farm on that theory.
  3. The low-end consumer shows no signs of getting a lift.
  4. Those pesky dollar stores.

Here is the bottom line. Another fat-finger e-mail (which may or may not reflect company-wide issues) told us what we already know. Inventories are growing faster than sales and the low end remains under pressure -- and you know what that means.



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