Dive Summary:
- Internal emails reveal Wal-Mart Stores Inc. executives blame payroll tax increases and deferred tax returns for the worst start to monthly sales in seven years this February.
- Americans are paying two percentage points more in Social Security taxes this year due to the end of the payroll-tax break; due to the late release of forms, Wal-Mart claims a postponement of tax returns can be expected.
- David Strasser, an analyst for Janney Montgomery Scott in New York, claimed the problem is "not Wal-Mart specific" and other retailers, such as Family Dollar, Target and supermarkets, are feeling the pinch as well.
From the article:
"... The payroll-tax increase may keep pressure on consumer spending, Daniel Binder, a Jefferies & Co. analyst in New York, wrote in a Feb. 15 report. It’s reasonable that Wal-Mart sales would be hurt and 'we suspect the same holds true for other retailers serving middle to lower income consumers as well.'
'The wrong thing to do now is panic with knee-jerk selling on the broad group,' Binder said in the note. ..."
