...your Wal Mart news and information source
--dedicated to rolling back the curtain on the Bentonvile Behemoth's corporate disinformation and other flackery--
welcomes comments from all sides and encourage vigorous debate.
Trolls, of course, will be fisked, deleted and banned.
"... The Writing On The Wal should be on your radar for at least an occasional visit. Think of it as slightly more relevant than keeping abreast of political campaigns. If you have as much political and economic power as most Americans, it likely is."
Angela Gunn Tech_Space, USA Today.
Rep. Paul Gillmor (R-Ohio).
At Farukh’s request, Lindsey had been emailing him photographs that didn’t involve her flipping off at military cemeteries. She’d been providing biographical details, too. Her favourite TV show was Parks And Recreation. Her employment history included five years at Walmart, “which was kind of soul-suckingly awful”. “Are you sure you want to say that Walmart was soul-sucking?” Farukh said. “Oh… What? Really?” Lindsey laughed, as if to say, “Come on! Everyone knows that about Walmart!” But then she hesitated. The conference call was proving an unexpectedly melancholic experience. It was nothing to do with Farukh. He really felt for Lindsey and wanted to do a good job for her. The sad thing was that Lindsey had incurred the internet’s wrath because she was impudent and playful and foolhardy and outspoken. And now here she was, working with Farukh to reduce herself to safe banalities – to cats and ice-cream and top 40 chart music. We were creating a world where the smartest way to survive is to be bland.If speaking ill of Walmart is a hazard, well, I'm damned. At least, however, I'll be damned for a good cause.
Business interests view Wal-Mart’s newly pledged pay raise as new ammunition in the fight against an increase in the federal minimum wage. Earlier this week, the discount retail giant announced it would raise its starting wage to $9 an hour — $1.75 above the federal minimum wage of $7.25---in its U.S. stores by April. The move won accolades from the White House and other proponents of higher wages for hourly workers. But business groups are also pouncing on the action, saying it is evidence that decisions about employee wages are best left to the private sector---not the federal government. “Our members feel this is the perfect example of the free market working the way it is intended to work,” said Jack Mozloom, a spokesman for the National Federation of Independent BusinessMozloom is, of course, a master of flackery. Jeff Hess: Have Coffee Will Write.
Walmart could meet the wage target its employees are calling for—without raising prices. We find that if Walmart redirected the $7.6 billion it spends annually on repurchases of its own company stock, these funds could be used to give Walmart’s low-paid workers a raise of $5.83 an hour, more than enough to ensure that all Walmart workers are paid a wage equivalent to at least $25,000 a year for full-time work. Curtailing share buybacks would not harm the company’s retail competitiveness or raise prices for consumers. In fact, some retail analysts have argued that by providing a substantial investment in the company’s front-line workforce, higher pay could be expected to improve employee productivity and morale while reducing Walmart's expenses related to employee turnover. With more money in their wallets, Walmart employees would likely spend a portion of the cash at Walmart itself, boosting the company’s sales. Sales might also increase as customers benefit from an improved shopping environment.Such progressive thinking would not have impressed Wall Street, however. What does impress Wall Street is boosting shareholder value, right now.
Despite the lack of productive benefit, massive share buybacks at Walmart have become a regular occurrence: according to data compiled by Bloomberg, Walmart has bought back about $36 billion in stock in its four previous fiscal years, while in June 2013 announced a new $15 billion share repurchasing program at its annual shareholder meeting. Even for investors, the intended beneficiaries of a share buyback, the value of this financial maneuver is often illusory. As a prominent business analyst explained to the Wall Street Journal last year, “the evidence overwhelmingly shows that heavy buyback companies usually create less value for shareholders over time... Many managements have become so infatuated with how buybacks increase earnings per share that these distributions are crowding out sound business investments that create more value over time.”Management craves buybacks the way Homer Simpson does doughnuts. A year later, Walmart seems to have taken the analysis, if not the remedy, that higher pay will benefit both shoppers and the company's bottom line.
In the last year (2013), Walmart has come under criticism from business analysts for a range of problems related to underinvestment in the company's frontline workforce. According to media reports, U.S. consumers have avoided Walmart’s stores because they are disorganized and shoppers cannot not [sic] find the items they seek on Walmart’s shelves. There were too few employees in the stores—or the workers who were present were too inexperienced—to keep items in stock and on the shelves. In February, leaked internal emails from Walmart’s corporate offices lamented that “sales are a total disaster,” and wondered, “Where are all the customers? And where’s their money?”Where indeed? Two reports are mentioned in the Demos paper and referenced as foot notes. The first is The Low-Wage Drag on Our Economy: Walmart’s Low Wages and Their Effect on Taxpayers and Economic Growth,” Democratic Staff of the U.S. House Committee on Education and Workforce, May 2013 and the second is Nick Hanauer, Testimony before the Subcommittee on Economic Policy, Senate Committee on Banking, Housing, and Urban Affairs, June 5, 2013 In the first case, the paper cites the report finding that low wages at a single Wal-Mart store cost taxpayers in between $900,000 and $1.74 million every year. In the second case, the paper quotes this bit of Hanauer's testimony:
As an entrepreneur and investor, I have started or helped start, dozens of businesses and initially hired lots of people. But if no one could have afforded to buy what we had to sell, my businesses would all would have failed and all those jobs would have evaporated. That’s why I am so sure that rich business people don’t create jobs, nor do businesses, large or small. What does lead to more employment is a “circle of life” like feedback loop between customers and businesses. And only consumers can set in motion this virtuous cycle of increasing demand and hiring. That's why the real job creators in America are middle-class consumers. The more money they have, and the more they can buy, the more people like me have to hire to meet demand.Henry Ford understood that economic fact and acted appropriately. That decision made the Ford Motor Company a powerhouse. Sam Walton acted similarly, but the empire he founded has lost the way. Jeff Hess: Have Coffee Will Write.
After meetings with Walmart representatives, public letters to the company’s CEO, and picketing Walmart stores over the past several years, we see that Walmart now decides to be one step ahead of several pursuing state laws that are raising the minimum wage. Still, Walmart’s increase to $9 an hour in April and to $10 an hour next February is less than what Walmart had to pay its workers in 1968, inflation adjusted. That would be $11 an hour. Moreover, Walmart workers want more than part time hours to even try to partly make ends meet. Walmart’s announcement does not address this problem for their workers, beyond making part-time scheduling notices more predictable. At $11,000 an hour plus lavish benefits, Walmart CEOs still have much to do to make it possible for their workers to make ends meet.Jeff Hess: Have Coffee Will Write.
Wal-Mart Stores was upgraded by stock analysts at S&P Equity Research to a “buy” rating in a report issued on Friday.Fair enough. Gore follows with two paragraphs of upbeat numbers:
Wal-Mart Stores traded up 0.93% on Friday, hitting $84.30. 13,799,353 shares of the company’s stock traded hands. Wal-Mart Stores has a 1-year low of $72.61 and a 1-year high of $90.97. The stock has a 50-day moving average of $87.04 and a 200-day moving average of $80.85. The company has a market cap of $271.7 billion and a P/E ratio of 17.15. Wal-Mart Stores also was the target of unusually large options trading activity on Wednesday. Investors purchased 25,913 call options on the stock. This is an increase of approximately 202% compared to the average daily volume of 8,592 call options. Wal-Mart Stores (NYSE:WMT) last announced its earnings results on Thursday, February 19th. The company reported $1.61 earnings per share for the quarter, beating the analysts’ consensus estimate of $1.54 by $0.07. The company had revenue of $130.65 billion for the quarter, compared to the consensus estimate of $132.29 billion. During the same quarter last year, the company posted $1.60 earnings per share. Wal-Mart Stores’s revenue was up 1.4% compared to the same quarter last year. On average, analysts predict that Wal-Mart Stores will post $5.14 earnings per share for the current fiscal year.Not exactly No. 1 with a bullet, but still ahead of possibly sand-bagged expectations, right? Then, buried more than halfway through the story, Gore provides some perspective.
A number of other firms have also recently commented on WMT. Analysts at JPMorgan Chase & Co. lowered their price target on shares of Wal-Mart Stores from $84.00 to $80.00 and set a “neutral” rating on the stock in a research note on Friday. Analysts at Deutsche Bank lowered their price target on shares of Wal-Mart Stores from $86.00 to $82.00 and set a “hold” rating on the stock in a research note on Friday. Analysts at Jefferies Group lowered their price target on shares of Wal-Mart Stores from $82.00 to $77.00 and set a “hold” rating on the stock in a research note on Friday. Finally, analysts at Barclays downgraded shares of Wal-Mart Stores from an “overweight” rating to an “equal weight” rating and lowered their price target for the stock from $90.00 to $85.00 in a research note on Friday. Four equities research analysts have rated the stock with a sell rating, sixteen have assigned a hold rating and five have issued a buy rating to the company [emphasis mine, JH]. The stock currently has a consensus rating of “Hold” and a consensus price target of $77.73.So, out of 25 analysts examined, 80 percent recommend either selling or holding Walmart stock and only 20 percent went with a buy rating. Now, how does that fit with Gore's lede or the headline on the story: S&P Equity Research Upgrades Wal-Mart Stores to Buy? Hmmm? Carly Forster earns points with her coverage and the headline: Mixed Reactions To Wal-Mart's Pay Increase News Jeff Hess: Have Coffee Will Write.
When Wal-Mart announced it would raise the minimum wage for a half-million hourly workers, the reaction from Main Street to Pennsylvania Avenue was universally positive, heralding the company for doing the "right thing." Wall Street likes "sure things," not the right thing. After the largest private employer made the move Thursday morning, its shares cratered by 3 percent despite also announcing better-than-expected earnings for last quarter and a higher dividend. And Friday, investment bank Barclays downgraded the stock. In fact, 14 analysts published research updates on Wal-Mart since the announcement, according to FactSet, and not one upgraded the stock on the notion the wage hike was a way to improve the long-term success of the company. All of them kept their "neutral" or "hold" ratings, Wall Street's version of "sell," and just about every single one lowered their earnings estimates on the increased labor costs.I imagine how the phone calls must be going out from Bentonville telling everyone to take a breath and be reassured that the wage increases were simply short-term smoke and mirrors. Walmart couldn't seriously plan on spending more money on workers could it? Jeff Hess: Have Coffee Will Write.
Wal-Mart found success in retail by being the consumers’ low-cost provider. But in order to keep prices low, it had to squeeze it’s own costs, which meant everything from pressuring vendors to keeping employee pay as low as reasonably possible. However, it appears that a combination of employee protests, bad press, and perhaps a tightening labor market [emphasis mine, JH] has forced the company’s hand. Earlier Thursday, Wal-Mart announced it would be giving a raise to around 500,000 employees. While this may be good for Wal-Mart’s employees, many of whom are actually customers, this means Wal-Mart’s profit margins are likely to get squeezed. “WMT’s cost of doing business is clearly rising, reflecting both self-imposed wage pressure and ongoing omnichannel investments, and earnings estimates likely to come under pressure with guidance, leading to a guarded response for WMT shares,” Fassler said. “Our estimates and price target are under review pending today’s conference calls and further analysis.”Will Doug McMillon last the year? Jeff Hess: Have Coffee Will Write.
Starting in 2016, [Does Walmart think that a year from now everyone will have forgotten about this slide?] Walmart will be one of the first [So, who was first? Second? Third?] retailers to offer some [Ah, that's the devil in the details. Some is a number greater than none, like oh say, one?] associates fixed schedules each week.Might happier workers be beneficial to producing happier shoppers? Hmmmm... could be. Clearly, Walmart is in a panic. Why else might the Bentonvile Behemoth even consider treating workers like anything other than worthless meat puppets to be abused at will by psychopathic managers? The intertubes were all a twitter over this announcement. I'm sorry, not even Cindy Loo Who could reinvigorate Walmart's heart. Jeff Hess: Have Coffee Will Write.
Walmart Stores in Fresno are taking part in a nationwide effort to feed the homeless by allowing shoppers to donate food at Walmart locations. The donations will benefit Fresno Unified’s Project ACCESS, which serves the needs of homeless students. Donations can be placed in the donation bins at Walmart stores until March 4.Jeff Hess: Have Coffee Will Write.Walmart,Wal-Mart
So here's a third possibility: Unlike many of the people who write about Wal-Mart, Wal-Mart understands how efficiency wages work. It is treating its workers better because this will enable the company to get better workers. cComments Wal-Mart's business model is, as my old entrepreneurship professor used to say, "Big Stores in Small Towns." Its core value proposition is, as the slogan goes, "Everyday low prices." Its core demographic is the lower middle class. For a long time, this was a recipe for rapid growth. But the heartland is pretty much full of Wal-Marts, the lower middle class is struggling harder and spending less, and there's more competition on the "low price" front than there used to be. So as a New York Times story notes, Wal-Mart's business model has evolved: "Doug McMillon, the company's chief executive, has also introduced a host of new strategies, including a shift in investment from brick-and-mortar stores to e-commerce, a focus on improving its fresh foods and groceries business, and an overhaul of inventory and stocking methods after complaints of shortages at its 4,400 stores across the United States. Wal-Mart is also looking to build smaller, neighborhood stores to make up for sluggish sales at its supercenters." What a lot of these changes have in common is that you need good workers to execute them well. (Terrible things happen in the grocery business unless you have an absolutely passionate commitment to rooting out expired meat and past-it produce.) Keeping stock on the shelves doesn't sound hard until you try to get resentful teenagers to actually do so. And so forth.McArdle, however, hesitates at the end. She doesn't arrive at the correct conclusion that McMillon's strategy is too little too late. Walmart has mistreated employees too much for too long and even at the magic level of $15 per hour, resentment will remain. Jeff Hess: Have Coffee Will Write.
Wal-Mart, long the whipping child of leftist labor movements, did something unexpected this week: they announced, free of any prompting, [emphasis mine, JH] that they’re giving their low-wage employees a rather significant raiseWilmot Proviso [I'm not making this up, JH] thinks that Walmart's decision to raise wages was purely an internal decision not influenced by strikes, bad press, poorly performing stocks, bribery scandals, dissatisfied customers, online competitors eating the company's lunch and a general malaise permeating the Bentonvile Behemoths corporate culture. Good luck with that Willy. Jeff Hess: Have Coffee Will Write.
A federal agency says Wal-Mart discriminated against a lesbian employee who sought health coverage for her ailing wife and has ordered "a just resolution" for violating her civil rights. The U.S. Equal Employment Opportunity Commission ordered the retail giant to work with Jacqueline Cote of New Bedford, Massachusetts, who hopes the determination will help her pay off $100,000 in medical bills. In a Jan. 29 EEOC ruling, obtained Wednesday by The Associated Press, the agency said Cote "was treated differently and denied benefits because of her sex." Cote tried to enroll her partner in Wal-Mart's health plan repeatedly starting in 2008, but coverage was denied and the company didn't provide it until 2014. In 2012, Cote's wife, Diana Smithson, was diagnosed with cancer. The Bentonville, Arkansas-based company said it expanded its policy in 2014 to include same-sex couples. "While we disagree with the finding of reasonable cause, we have notified the EEOC of our willingness to meet with them and Miss Cote to discuss resolving the matter," spokesman Randy Hargrove said.Walmart almost gets an atta-boy, but the weasely Wal-Flack response ruined the moment. *Gay, Lesbian, Bi-Sexual, Transgendered and Questioning (uncertain). Jeff Hess: Have Coffee Will Write.