NEW YORK (AP) — Wal-Mart shoppers — much like many Americans — still feel like they’re in a recession.
In the uneven economic recovery, their bills are going up, but their wages are not. While the well-heeled crowd benefits from gains in the stock market, they’re still struggling with a higher payroll tax. And shopping for bargains isn’t a hobby, but a necessity.
For these reasons, the world’s largest retailer on Thursday cut its annual outlook for the second time in three months and offered fourth-quarter guidance that’s below Wall Street’s expectations. On the news, its shares fell 10 cents to $79.
The disappointing forecast shows how vulnerable Wal-Mart — and its customers — are to the ups and downs in the economy. Wal-Mart’s shoppers are dealing with a 2 percentage point increase in the Social Security payroll tax since Jan. 1. A partial 16-day government shutdown this year also hurt business in areas with large military bases. And the Nov. 1 expiration of a temporary boost in government food stamps could also hurt customers’ ability to spend, though the discounter says it’s too early to know.
On top of that, Wal-Mart also is facing increased competition from online rivals like Amazon.com, which is opening warehouse hubs closer to cities to speed up delivery. Another threat: Dollar stores, which are wooing customers with convenient locations and name-brand products at discounted prices.
Wal-Mart earned $3.74 billion, or $1.14 per share, in the three months that ended Oct. 31. That compares with $3.64 billion, or $1.08 per share, a year earlier. Net sales rose 1.6 percent to $114.88 billion.
Analysts were expecting earnings of $1.13 per share on net sales of $116.9 billion.