Walmart Stores Inc. had the worst sales start to a month in seven years, according to internal emails obtained by Bloomberg News.
"In case you haven't seen a sales report these days, February MTD sales are a total disaster," Jerry Murray, Walmart's vice president of Finance and Logistics, said in a Feb. 12 email to other executives, referring to month-to-date sales.
Walmart and other discounters, such as Family Dollar Stores, are bracing for a rise in the payroll tax to take a bigger bite from the paychecks of shoppers already dealing with elevated unemployment. The world's largest retailer's struggles come after executives expected a strong start to February because of the Super Bowl, milder weather and paycheck cycles, according to the minutes of a Feb. 1 officers' meeting Bloomberg obtained.
Murray's comments about February sales follow disappointing results from January, a month that Cameron Geiger, senior vice president of Walmart U.S. Replenishment, said he was relieved to see end, according to a separate internal email obtained by Bloomberg News.
"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?" Geiger asked in a Feb. 1 email to executives. "Well, we just had one of those weeks here at Walmart U.S. Where are all the customers? And where's their money?"
"As with any organization, we often see internal communications that are not entirely accurate, that lack the proper context and represent individual opinions," David Tovar, a Walmart spokesman, said in an interview, adding that the company will report fourth-quarter earnings on Feb. 21. Walmart's fourth quarter ends in January.
Murray and Geiger didn't immediately return telephone and email messages seeking comment.
Both executives attributed the performance to increased payroll taxes and delayed tax returns, which Geiger called "a potent one-two punch," according to the emails.
About $19.7 billion more in tax refunds had been delivered to shoppers by this time last year, according to an analysis prepared by Walmart's Global Customer Insights & Analytics division that was attached to Murray's email on Feb. 12. The retailer expected returns to be delayed by three to four weeks because of the late release of tax forms and additional, federally mandated tax-fraud scrutiny.
When a payroll tax break expired Dec. 31, Americans began paying 2 percentage points more in Social Security taxes on their first $113,700 in wages. For a person making $40,000 a year, that is about $15 a week.
The extra tax bite is about equal to a year of car insurance for a family making $30,000 or a basket of groceries per month for a family making $50,000, according to Walmart's analysis.
Other retailers who court low income Americans also are bracing for the rising taxes.
Higher payroll taxes "go against our customers' wallet," Family Dollar Chief Executive Officer Howard Levine said on a Jan. 3 conference call. "Clearly, they do not have as much for discretionary purchases than they did."
The U.S. economy shrank at a 0.1 percent annual rate in the fourth quarter, and the unemployment rate rose 0.1 percentage point to 7.9 percent in January.


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