Walmart VP Calls February Sales ‘Total Disaster’

Walmart’s stock price was slightly bruised after Bloomberg published the leaked e-mails at 2:15 today.

It might be easy to imagine Walmart executives swimming around, Scrooge McDuck-like, in rooms full of gold coins, while throwing bricks of cash on a fire, but really it’s just like any other business (except really frickin’ huge), where a few bad weeks of sales can lead to panic. The folks at Bloomberg have gotten their hands on e-mails that show the level of freaking-out that is going on at Walmart in the face of a not-so-great month.
“In case you haven’t seen a sales report these days, February [month-to-date] sales are a total disaster,” the company’s vice president of finance and logistics wrote on Feb. 12. “The worst start to a month I have seen in my ~7 years with the company.”
This e-mail came only a few weeks after another VP had fretted to his peers about lackluster January sales.
“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?” wrote this second exec on Feb. 1. “Well, we just had one of those weeks here at Walmart U.S. Where are all the customers? And where’s their money?”
Bloomberg says that the leaked e-mails pin the blame for worse-than-expected sales on increased payroll tax pinching people’s paychecks and delayed tax returns that would normally have put billions of additional dollars back in consumers’ pockets by this time of year.
According to leaked minutes of a Feb. 1 meeting, Walmart CEO Bill Simon said that Walmart’s market share is still growing, in spite of a still-constricted economy. However, he cautioned his executives that, “In an environment like this, we can’t afford to hurt ourselves… Self- inflicted wounds are our biggest risk and our toughest enemy.”
“We have to fight against the tougher economic environment to earn a bigger share of a smaller consumer spending pie,” said Simon.
Regarding all this leaked info, a Walmart rep tells Bloomberg, “As with any organization, we often see internal communications that are not entirely accurate, that lack the proper context and represent individual opinions.”
The Bloomberg report comes at the same time as an analyst at Cleveland Research predicted same-store sales growth of 0-1%. Like the Walmart execs, the analyst cited payroll tax hikes and tax return delays, throwing in higher gas prices for good measure.
“If this weakness persists, we believe WMT may react by getting more aggressive on price,” writes the analyst, “which could negatively impact gross margin performance on top of the weak sales.”