The Working Class Is Sinking and Dragging Walmart Down With It

A blog about business and economics.
Aug. 14 2014 4:09 PM

The Working Class Is Sinking and Dragging Walmart Down With It

Walmart.
Another quarter, another disappointment.

Photo by Robyn Beck/AFP/Getty Images

Business continues to disappoint at Walmart's U.S. locations. The big-box retailer reported on Thursday that sales at existing stores were flat in the latest quarter after declining for the previous five. It said traffic dipped 1.1 percent (though customers who made it in chose to spend slightly more) and cut its full-year earnings outlook on higher-than-expected health care costs and company spending on e-commerce.

Walmart has now spent months explaining away the poor performance of its U.S. division. In the first quarter it blamed the weather; in Q4 2013 it cited cuts to government benefits and increased taxes; and in Q3 2014 it gave perhaps the vaguest excuse of all, a "challenging global economy and negative currency exchange rate fluctuations." In a sign that it might be finally shouldering some responsibility for its results, Walmart a few weeks ago ousted U.S. chief Bill Simon and appointed former Walmart Asia head Greg Foran to replace him.

Advertisement

In fairness to Walmart, those excuses aren't crazy. Dollar stores, which typically cater to the lowest income bracket, have struggled to reclaim shoppers amid the slow economic recovery. Family Dollar, which is being bought by Dollar Tree, has said that government cuts to food-stamp spending were "not a positive" for its customers. Middle-class consumers are spending less as well—a fact that's hurting casual-dining chains like Red Lobster and Olive Garden and retailers like Macy's, which lowered its full-year sales outlook after missing estimates on Wednesday.

Setting U.S. results aside, Walmart's earnings didn't look that bad. Its revenue beat expectations and e-commerce sales—an area it has focused on improving—gained 24 percent (discounting currency fluctuations). "I’m encouraged by the performance of our International business, our Neighborhood Market sales in the U.S. and by our e-commerce growth," Doug McMillon, Walmart's president and CEO, said in a statement. "Stronger sales in the U.S. businesses would've also helped."

Alison Griswold is a Slate staff writer covering business and economics.

 

TODAY IN SLATE

Medical Examiner

The Most Terrifying Thing About Ebola 

The disease threatens humanity by preying on humanity.

I Bought the Huge iPhone. I’m Already Thinking of Returning It.

Scotland Is Just the Beginning. Expect More Political Earthquakes in Europe.

Students Aren’t Going to College Football Games as Much Anymore

And schools are getting worried.

Two Damn Good, Very Different Movies About Soldiers Returning From War

The XX Factor

Lifetime Didn’t Think the Steubenville Rape Case Was Dramatic Enough

So they added a little self-immolation.

Politics

Blacks Don’t Have a Corporal Punishment Problem

Americans do. But when blacks exhibit the same behaviors as others, it becomes part of a greater black pathology. 

Why a Sketch of Chelsea Manning Is Stirring Up Controversy

How Worried Should Poland, the Baltic States, and Georgia Be About a Russian Invasion?

Trending News Channel
Sept. 19 2014 1:11 PM Watch Flashes of Lightning Created in a Lab  
  News & Politics
Weigel
Sept. 20 2014 11:13 AM -30-
  Business
Business Insider
Sept. 20 2014 6:30 AM The Man Making Bill Gates Richer
  Life
Quora
Sept. 20 2014 7:27 AM How Do Plants Grow Aboard the International Space Station?
  Double X
The XX Factor
Sept. 19 2014 4:58 PM Steubenville Gets the Lifetime Treatment (And a Cheerleader Erupts Into Flames)
  Slate Plus
Tv Club
Sept. 21 2014 1:15 PM The Slate Doctor Who Podcast: Episode 5  A spoiler-filled discussion of "Time Heist."
  Arts
Brow Beat
Sept. 21 2014 2:00 PM Colin Farrell Will Star in True Detective’s Second Season
  Technology
Future Tense
Sept. 19 2014 6:31 PM The One Big Problem With the Enormous New iPhone
  Health & Science
Bad Astronomy
Sept. 21 2014 8:00 AM An Astronaut’s Guided Video Tour of Earth
  Sports
Sports Nut
Sept. 18 2014 11:42 AM Grandmaster Clash One of the most amazing feats in chess history just happened, and no one noticed.