(NEW YORK) — Walmart is having the worst start to a sales month in seven years and top executives are blaming new payroll taxes for having a bad impact on their business, according to internal memos leaked to Bloomberg news. They say higher taxes, mean less money for shoppers to spend.
Walmart shares fell $1.52, or 2.1 percent, to $69.30 on Friday. According to the Wall Street Journal, the retail giant’s stock slid by as much as 3.8 percent after Bloomberg reported Friday afternoon that Walmart’s vice president of finance and logistics, Jerry Murray, said this month’s sales have been a “total disaster.”
“In case you haven’t seen a sales report these days, February [month-to-date] sales are a total disaster,” Murray wrote in an email to other Walmart executives. “The worst start to a month I have seen in my ~7 years with the company.”
Many economists have been warning that new tax increases — specifically the payroll tax — will hurt growth by taking away spending money from consumers. This tax has the biggest effect on lower income consumers.
Bill Martin of Shoppertrak, a firm that counts retail traffic, agrees that may be true, and that people “may be trying to find their willingness to go out and spend.” Still, he adds that Jerry Murray may be over-reacting.
“You know there’s no panic even if we are soft by a percentage point or two,” Martin says.
According to the Walmart emails, delayed tax refunds leaving shoppers with less cash in February could also be blamed for the poor sales. But Shoppertrak expects pre-Easter spending to pick-up that will continue to help grow the economy.
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