posted on Aug, 16 2013 @ 10:03 PM
Some posters wonder why the big deal if Walmarts earnings per share are down by a penny and sales are off by 2%?
The big deal is multiply a penny times the millions of shares out there... it adds up quick and shares are based on profits. Shares going down means
profits are down... gross margin is down. That means the cost of doing business and the cost of goods are going up.
For instance, the cost of a jar of mayonnaise or a weedeater goes up, but to stay competitive Walmart holds it's retail price the same eating the
loss. That in turn eats into profits.
So what do you do to cover the loss and maintain profits and margin? what is the one controlled cost you have as a business? Lights? Refrigeration?
Nope... it is labor. Payroll. A relative and his entire night shift got laid off from a new Walmart store in a nearby town. Walmart is doing away with
the 3rd shift stockers instead going to early day shift stocking. They inturn become stockers/ customer service... stock shelves and work the floor...
thereby cutting out a few people/ positions no longer deemed necessary.
Going back to the shares... a decline for Walmart that promotes itself as a cost cutting, budget minded store for the consumer... this is big in this
economy. Consider that grocery costs... all costs have gone up, yet overall retail sales are down and Walmart should have low income, low mid class,
struggling consumers flocking to it's stores... this is big.
This is millions of dollars lost in sales and profits for the largest retailer in the world.... as well as share holders. Most retailers want more
than 2% growth. Generally, 3-5% is the norm per year and is even anticipated and worked into the monthly budget per retail location.
If this projected sales increase is not met, then the store starts running at a deficit... losing money. This then eats into profits and margin even
People are not hired or replaced. Renovations and equipment are not purchased. Instocks are tightened and orders are put on hold. Fewer trucks are run
which tranlates into fewer truckers, warehouse labor, local maintainance is cut... electricians, plumbers, grounds keeping goes to biweekly, ...
all of these lost wages are then seen at the local grill before the truckers head out, no grass cutting means no gas sold and no coffee for the crew
or snacks... no equipment orders means no steel for cardboard balers, no steel sinks in the food courts, no ovens in the bakeries, fewer orders means
fewer mowers in the garden area, etc.
Multiply this by thousands of stores and dozens of distribution centers/ warehouses... and this is not good for the economy.
Next we have thousands of ex part timers looking for the fewer and fewer available part time jobs. A flooded labor market means lower wages to get
workers in the door of another part-time establishment.
And realize now that all of these folks HAVE to have insurance under Obamacare no matter how young and healthy and unable to afford it... and we have
a wonderful economic enviroment.
Realize too that inorder to make Walmart more profitable, more of the teams become part time or even temporary... inorder to flank the Obamacare