Wal-Mart Cuts Guidance Again, Blames Obamacare

Tyler Durden's picture




 

Remember this chart from November, when everyone was predicting a surge in global GDP and "escape velocity" growth for the US economy on the latest burst of irrational hopium that central-planning works (it doesn't)?

Well, yeah....

Also, it just got worse.  Moments ago WalMart reported in-line EPS driven by flat comp store sales. Curiously, even Wal-Mart is marginally increasing prices to offset a decline in store traffic:

During the 13-week period, Walmart U.S. comp traffic decreased 1.1 percent, while average ticket increased 1.1 percent.

The CEO's take:

As it relates to our challenges in the quarter, we wanted to see stronger comps in Walmart U.S. and Sam’s Club, but both reported flat comp sales. Stronger sales in the U.S. businesses would’ve also helped our profit performance.

And when the best priced retailer in the world is forced to start hiking prices to offset declining volumes, what does that mean for cost-push (not its benign wage-driven, demand-pull cousin) inflation?

But the real message, and what suggests global GDP will continue to deteriorate, was that Wal-Mart just did what it has done so many times in the past several years. It cut guidance.

Walmart updated full year EPS guidance to a range of $4.90 to $5.15, from a previous range of $5.10 to $5.45. This range includes third quarter EPS guidance of $1.10 to $1.20. The new full year guidance reflects incremental investments in e-commerce and higher U.S. health-care costs than previously anticipated. This guidance also assumes the effective tax rate will be around 34 percent for the third quarter. The annual effective tax rate is projected to be between 32 and 34 percent. The actual rate will depend on a number of factors, including our performance, discrete items and pending U.S. Congressional actions regarding the extension of certain tax legislation.

Obamacare's fault.

Oh, and those predicting an imminent CapEx renaissance, please don't look at the 16% Y/Y plunge in WMT CapEx in H1. The good news, for shareholders, free cash flow rose to $6.8 billion from $5.2 billion, thanks to a continue decline in investing in the future.

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Thu, 08/14/2014 - 07:36 | 5091371 Dubaibanker
Dubaibanker's picture

First was weather....now Obamacare...what will be next...Russia?

Thu, 08/14/2014 - 07:40 | 5091382 AlaricBalth
AlaricBalth's picture

Locusts

Thu, 08/14/2014 - 07:52 | 5091418 ss123
ss123's picture

Ebola

Thu, 08/14/2014 - 08:08 | 5091467 Headbanger
Headbanger's picture

ISIS..

Oh my!

Thu, 08/14/2014 - 08:51 | 5091661 de3de8
de3de8's picture

Polar vortex

Thu, 08/14/2014 - 09:31 | 5091841 Bad Attitude
Bad Attitude's picture

Next? Inflation - wholesale price increases. Maybe more EBT system glitches.

Thu, 08/14/2014 - 11:34 | 5092436 Chuck Walla
Chuck Walla's picture

Vote Hillary, for the common good!

FORWARD SOVIET!

Thu, 08/14/2014 - 07:52 | 5091419 krispkritter
krispkritter's picture

You mean Walmart customers?

Thu, 08/14/2014 - 09:24 | 5091815 Truthseeker2
Thu, 08/14/2014 - 08:01 | 5091421 GetZeeGold
GetZeeGold's picture

 

 

Wal-Mart Cuts Guidance Again

 

29.5 hr/wk jobs bitchez!

 

Gonna have to move the heavens to change that fact.

Thu, 08/14/2014 - 09:40 | 5091883 ElvisDog
ElvisDog's picture

Don't be silly. Why would they "plan" legislative disaster. Think Occam's Razor. Obamacare was a successful attempt by health insurance companies to pass a law to force people to buy their products thereby increasing and guarenteeing health insurance company profits in the future. Their lobbyists wrote the bill, and that's what the purpose was.

Thu, 08/14/2014 - 12:07 | 5092628 crazzziecanuck
crazzziecanuck's picture

Healthcare, just like education, is always destined to have ever-increasing costs, ObamaCare-like programs or not.  ObamaCare was always positioned to be whatever group wanted it to be.  For "lefties", it was about humanizing a cruel and corrupt system by making the system "work" for everyone.  For the "righties", it was about prventing the government to have any truly substantive affect on corporate profiteering (ObamaCare actually entrenches more profiteering).

Thu, 08/14/2014 - 09:48 | 5091925 Freddie
Freddie's picture

Pretty much F Wal Mart!   The place brings in Chinese crap that is junk.  Their customers anymore are Obama voters with EBT cards and illegal aliens.   It should be called Third World Mart.  Shithole store.

The billionaire elites F'ed Amerika and now they cannot understan how they killed the golden goose.  F them.

Thu, 08/14/2014 - 07:41 | 5091384 BLOTTO
BLOTTO's picture

'And when the best priced retailer in the world...'

.

The masses are leaving 'the best priced retailer' and heading to the Dollar Store and Thrift store.

Thu, 08/14/2014 - 08:00 | 5091436 AlaricBalth
AlaricBalth's picture

Was dropping off some stuff at a Goodwill store last Saturday and the line for people making back to school purchases was quite long at the register.
Antithesis to that anecdote, my sister is the store manager at Sachs Fifth Avenue in Bal Harbour and her store is experiencing record sales volume.

The polarization of the US economy has reached historic proportions. The unintended consequences are manifesting themselves in seething social unrest as experienced in Ferguson.

http://www.zerohedge.com/news/2014-06-05/rich-get-richest-household-net-...

Thu, 08/14/2014 - 09:49 | 5091931 Freddie
Freddie's picture

Bal Harbour = bagel land and Russians. 

Thu, 08/14/2014 - 11:11 | 5092283 DullKnife
DullKnife's picture

Unrest in Fegurstan is nothing unusual.

It is the people who make the slum.

If it was a mob of mixed age White people protesting, then there would be a serious message there.

But Blacks burning, looting and rioting?

S.O.P. for such civilized and high class pillars of society.

 

Thu, 08/14/2014 - 09:52 | 5091941 Freddie
Freddie's picture

Best priced?  LOL!  Wal Mart went to Germany and Aldi kicked their ass so hard that Wal Mart gave up on Germany and most of Europe.    Between Aldi and Lidl - Wal Mart never had a chance in Germany and Europe.

Aldi is also Trader Joes.

Thu, 08/14/2014 - 07:46 | 5091401 Shizzmoney
Shizzmoney's picture

I think they actually have a wheel at the WMT offices a la The Price is Right where they spin it and whatever "scenario" it lands on, that what they use to blame shitty performance on.

Thu, 08/14/2014 - 07:51 | 5091413 Bindar Dundat
Bindar Dundat's picture

Until they spin "The Public" and then they release the dogs of war on us to squeeze the last little but of borrowing power out of us to keep the system alive. When that no longer works than we are no longer useful and the culling will begin.  So as quoted by the head of  the Reserve l "shop or die mother fuckers".

Thu, 08/14/2014 - 07:54 | 5091428 williambanzai7
williambanzai7's picture

Poorly kept greens

Thu, 08/14/2014 - 08:40 | 5091604 Raging Debate
Raging Debate's picture

Dubaibanker - Higher healthcare costs and skyrocketing premiums definately would impact retail sales. That and much higher food and energy costs this year.

Thu, 08/14/2014 - 08:52 | 5091664 drendebe10
drendebe10's picture

,"if u like ur health insurance, u can keep ur health insurance."

Thu, 08/14/2014 - 09:32 | 5091849 dicksburnt
dicksburnt's picture

nothing MOAR EBT can't fix.  Print, give, spend.

Thu, 08/14/2014 - 16:35 | 5094101 redc1c4
redc1c4's picture

you forget the obvious source of the problem: George W. Bush

;-)

Thu, 08/14/2014 - 07:36 | 5091373 firstdivision
firstdivision's picture

Equities are up, up, up and away.  This shit is like Superman.  The only thing that can bring it down is a GAAP earnings report, but we killed GAAP in favor of fake performance numbers.

Thu, 08/14/2014 - 07:58 | 5091433 GetZeeGold
GetZeeGold's picture

 

 

Equities are up, up, up and away. 

 

Print that shit Rick Masters....

https://www.youtube.com/watch?v=6Q6VsR_4PuQ

Thu, 08/14/2014 - 07:37 | 5091375 KidHorn
KidHorn's picture

Wal-Mart can't continue expanding. They're everywhere. CapEx can only be spent on modernization of existing stores.

Thu, 08/14/2014 - 08:05 | 5091453 shovelhead
shovelhead's picture

Au contraire,

They're building a Supermarket Pharmacy in my town of 3000.

They're moving into small rural places that are underserved or with one supermarket with no competition.

20 years ago they wanted to come in with a Supercenter because of the interstate hwy but the local merchants sent em packing.

Thu, 08/14/2014 - 09:56 | 5091963 Freddie
Freddie's picture

Their newer stores are either Supermarkets or supermarkets and much smaller merchandise stores.  Why? EBT cards.  Wal Mart is the food lines of Amerika.

The only good thing is Aldi is expanding along with Aldi's Trader Joes.  Aldi and Lidl murdered Wal Mart in Germany and Europe.  Aldi will slowly put a real hurtin on WMT in the USSA.    Aldi has less GMO food than WMT.

Thu, 08/14/2014 - 09:36 | 5091876 toady
toady's picture

I remember reading that CA kept them out. That's a Hella big market they could expand into...

Thu, 08/14/2014 - 07:39 | 5091379 Last of the Mid...
Last of the Middle Class's picture

1.1% doesn't even cover inflation. Wally world blames Obamacare, Obamacare blames the polar vortex, and Hillary says What difference does it make. However, less Wal marts is definately a good thing.

Thu, 08/14/2014 - 09:15 | 5091765 MachoMan
MachoMan's picture

However, less Wal marts is definately a good thing.

Yeah, you can go from having a few low wage jobs in your town to none when people purchase items online instead...

Thu, 08/14/2014 - 07:39 | 5091380 Racer
Racer's picture

31s

WMT boosting prices to offset declining traffic means cost-push inflation is around the corner"

 

Let me see, some people can't afford to go to Walmart.

Walmart raises prices... even more people can't afford to go to Walmart.

 

Yes I can see the logic behind raising prices  /sarc

Thu, 08/14/2014 - 08:35 | 5091584 Bindar Dundat
Bindar Dundat's picture

Can we all say " STAGFLATION" ?

Thu, 08/14/2014 - 09:21 | 5091797 MachoMan
MachoMan's picture

No, it's cost push inflation.  The reason so many folks want to call it something different is because true cost push inflation (what we have) only comes about every so often and is less frequent than demand pull (at the very least, certainly not allowed to be discussed on the MSM the same as demand pull).  Everyone wants to discover a new species, but this one has been observed for millennia.

Once retailers push producers to the brink, then things get interesting.  Right now, most of the battle is between consumers and retailers.  If walmart, who has the most leverage of any retailer, cannot push back, then we're getting close.

Thu, 08/14/2014 - 11:18 | 5092323 DullKnife
DullKnife's picture

Inflation hurts everyone (well, Mainstreet...not WallStreet).

Local water and ice cream shop...Mom & Pop operation.

Sell premium ice cream as a niche neart large supermarkets selling regular ice cream.

Premium ice cream supplier raised prices to this small retailer a big jump.

Raised a double scoop in a cup from about $3.50 to $4.50.

I used to take the kids there a couple times a week as a special treat.

But now at $9.00 (and tax)?   No more.

Now it is the dollar menu cone at BurgerKing (was $1.00 but now raised to $1.29 plus tax) or nothing.

 

 

Thu, 08/14/2014 - 07:42 | 5091386 Dubaibanker
Dubaibanker's picture

4th casino in 2014 in Atlantic City to close by Sep 10.

3,000 more jobs gone. How can Wal Mart succeed when it's customers have no jobs? Of course, sales have to keep going down.

In latest setback to Atlantic City, lavish Revel casino to close

Thu, 08/14/2014 - 07:54 | 5091425 AdvancingTime
AdvancingTime's picture

This huge casino closing is no small comment about the "real economy" and what is still happening across America. Below is an article about small business failures and how they should receive a lot more attention then they do, we will see a lot of these in the near future as people have started down this path when unable to find a job.

Small business is hard, going into business is risky, and many people are not up to the task. As a property owner that leases space to many start-ups I have a keen interest and knowledge of the microeconomics that occur. Just as important is the effect, long and short term on the economy. With most business start-ups having a very short lifespan of just months or around a year, the short term burst of spending is quickly followed by the longer term negatives. More on the toll taken on all of us when a small business fails in the article below.

http://brucewilds.blogspot.com/2013/03/small-business-failures.html

Thu, 08/14/2014 - 08:05 | 5091451 Squid-puppets a...
Squid-puppets a-go-go's picture

still, its the wrong casinos closing. Should be the ones on wall st

Thu, 08/14/2014 - 10:39 | 5092138 Pure Evil
Pure Evil's picture

Actually with each state passing laws allowing casino gambling its getting harder and harder for the major hubs like Las Vegas and Atlantic City to pull in customers.

Pennsylvania passed a law allowing gambling at its race tracks and other venues, so there's no need to drive to Atlantic City anymore. Even though Jersey built a turnpike that runs from Philly down to Atlantic City explicitly for that purpose. And Atlantic City still has to compete with the Indian Casinos in Connecticut.

All in all, people are still gambling, they're just not taking junkets to Las Vegas or Atlantic City, they're spending their money closer to home.

Makes sense anyway, all that money spent on travel and hotel stays can be gambled away instead at the local casino. And, the money you would have gambled anyway can now be spent on booze and drugs.

Thu, 08/14/2014 - 11:28 | 5092383 DullKnife
DullKnife's picture

Mutiple small businesses have failed locally.

Part of the reason is high rents for commercial space.

Here in a small, low traffic town, an est. 15 x50 foot store space in local micromall is about $2,000 per month+utilities+licenses+taxes+wages.   Which is hard for small startup businesses to handle.

A friend has a restaurant in a larger city, moderate traffic area, pays a bit over $5,000 per month rent.

Hard to cough that up monthly.

Local military base shut down.  Hundreds of houses and many good buildings with commercial potential just sitting idle.  Govt could have rented/leased/sold the houses to area working class families and same to small businesses for low cost, helping local people and local economy.

What did the Govt do?

Nothing.

Let all sit idle, let be vandalized.

Gave prime lands and buildings in sweetheart deals to connected real estate developers and the like who tore down the affordable housing and built high-priced housing.  Local Govt happy as property tax on new expensive buildings are much higher than old old houses/buildings.

DK

Thu, 08/14/2014 - 09:23 | 5091809 MachoMan
MachoMan's picture

How can Wal Mart succeed when it's customers have no jobs? Of course, sales have to keep going down.

Walmart accepts SNAP...  In other words, walmart succeeds the same way everyone else is presently succeeding, by being closeser to the spigot.

Thu, 08/14/2014 - 09:29 | 5091838 Eyeroller
Eyeroller's picture

Atlantic City and Las Vegas now obsolete.

We have the stock market now.

Thu, 08/14/2014 - 10:05 | 5092000 FrankDrakman
FrankDrakman's picture

I'll say Vegas is obsolete. You can lose at a casino. BTFATH, and you'll never be sorry!

Thu, 08/14/2014 - 10:23 | 5092077 Freddie
Freddie's picture

NJ voted for this TWICE.  Nice job f**ktards.  Stay in NJ and stay out of the south and the non-lib parts of Obama's Amerika.

Thu, 08/14/2014 - 07:42 | 5091388 Squid Viscous
Squid Viscous's picture

futures still green? check... good thing "investors are focusing on earnings now that geopolitical tensions are easing" I read that on Yahoo Finance...

Thu, 08/14/2014 - 07:46 | 5091403 Shizzmoney
Shizzmoney's picture

This just in: investors are shitty are reading comprehension

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