Payroll Tax Blues: Walmart Execs Lament 'Where are Customers'

Payroll Tax Blues: Walmart Execs Lament 'Where are Customers'The end of the payroll tax break last month – about $40 less a paycheck for a family making $50,000 a year – seems to be having an impact after all, especially if you go by reported email exchanges among executives for the biggest U.S. retailer Walmart.
A brouhaha has erupted over internal emails made public by Bloomberg in which Walmart executives comment on February sales marking one of the worse starts to a month in years.
According to Bloomberg, Jerry Murray, Walmart’s vice president of finance and logistics, said the following in a Feb. 12 e-mail to other executives, referring to month-to-date (MTD) sales:
“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 e-mail to other executives, referring to month-to-date sales. “The worst start to a month I have seen in my ~7 years with the company.”
That comment came after another e-mail referring to disappointing results for January. This one comes from Cameron Geiger, senior vice president of Walmart U.S. Replenishment, Bloomberg reports.
Geiger: “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? Well, we just had one of those weeks here at Walmart U.S. Where are all the customers? And where’s their money?”
The email revelations have sent Wall Street analysts abuzz about the significance of Walmart’s slow sales, particularly in light of the end of the payroll tax break and overall U.S. consumer spending.
Most workers had been enjoying the tax break for two years, but it came to an end in January when neither political party nor President Obama put forth much of an effort to renew it.
The money for the “holiday” came from taxes paid to fund Social Security, half of which is paid by employers and the other half by workers.
For 2011 and 2012, Congress and Obama cut the share paid by workers from 6.2 percent to 4.2 percent.
But this year, Americans again started paying those 2 percentage points more in Social Security taxes on their first $113,700 in wages. That’s about $15 a week for a person making $40,000 a year.
In addition, income tax refunds may be delayed in part because of the late release of Internal Revenue Service forms, delaying spending-cash infusions for American consumers who shop at Walmart, Target, Family Dollar Stores and other retailers.
“It’s not Wal-Mart specific,” David Strasser, an analyst for Janney Montgomery Scott LLC in New York, told Bloomberg.
Family Dollar Stores, Target and supermarkets are seeing similar effects, Scott said. “Anyone with any low-end exposure is going to feel this. That customer runs out of money every day as it is. Now they’re really going to run out of money.”

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