Tag Archives: paycheck to paycheck

Financial Condition Of Many Americans

The financial condition of many Americans remains very disconcerting on many fronts, as seen in many statistics and empiricism.

I have have written many posts on this widespread problematical financial condition, and many of these posts are seen in the “paycheck to paycheck” tag.

One recent notable report on the financial conditions of Americans includes the Russell Sage Foundation’s “Wealth Levels, Wealth Inequality, and The Great Recession“(pdf) which I mentioned in the August 7, 2014 post titled “Thoughts Concerning The Next Financial Crisis.”  This report has information regarding individuals’ net worth, and portrays many deeply disconcerting aspects concerning net worth levels and trends.  Another report on the subject was the Federal Reserve’s “Report on the Economic Well-Being of U.S. Households” (pdf) for 2013, and this was last discussed in the August 11, 2014 post titled “Financial Situation Experienced By Americans.”

Since that time, there have been at least two more notable reports that provide insights into the financial condition of Americans.   One is the McKinsey report of December 2014 titled “America the frugal:  US Consumer Sentiment Survey.”  Another is the bankrate.com survey discussed in the January 7, 2015 bankrate.com post titled “Budgets can crumble in times of trouble.”

The McKinsey report contains various notable information, including indications of a continuing high level of consumers who report they are living “paycheck to paycheck.”

The bankrate.com survey is dicussed in the Wall Street Journal post of January 7, 2015, titled “Most Americans Don’t Have Savings to Pay Unexpected Bill.”  An excerpt:

Only 38% of those polled said they could cover a $500 repair bill or a $1,000 emergency room visit with funds from their bank accounts, a new Bankrate report said. Most others would need to take on debt or cut back elsewhere.

Additional details can be seen in the reports and posts mentioned above.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 2062.14 as this post is written

Walmart’s Q3 2015 Results – Comments

I found various notable items in Walmart’s Q3 2015 management call transcript (pdf) dated November 13, 2014.  (as well, there is Walmart’s press release of the Q3 results)

I view Walmart’s results and comments as particularly noteworthy given their retail prominence and focus on low prices.  I have previously commented on their quarterly management call comments; these previous posts are found under the “paycheck to paycheck” tag.

Here are various excerpts that I find most notable:

comments from Greg Foran, president and CEO of Walmart U.S., page 10:

Now, let’s turn to this quarter’s performance. Net sales grew $2.3 billion, or 3.4 percent. For the 13-week period ended October 31, comparable sales were up 0.5 percent. This is the first positive comp for the Walmart U.S. business in 7 quarters, despite approximately 70 basis points of impact from SNAP-related headwinds. Ticket was up 1.2 percent, while traffic declined 0.7 percent. Note that traffic improved 40 basis points from Q2 and 70 basis points from Q1.

comments from Greg Foran, president and CEO of Walmart U.S., page 11:

Shifting to the remainder of our financial results … Gross profit rate declined 22 basis points. This was driven primarily by pharmacy cost inflation and reductions in third-party reimbursement rates. Additionally, we’ve continued price investment in key categories such as meat and preferred Medicare plans in pharmacy.

comments from Greg Foran, president and CEO of Walmart U.S., page 13:

As we enter the fourth quarter, we see both opportunities and challenges ahead of us. We lapped the approximately 6 percent reduction in SNAP benefits on November 1. Additionally, gas prices are considerably lower this year than a year ago, which may give customers a little more discretionary spending power in the coming months. And as I just discussed, we’re enthused by our holiday plans across the box and online. However, we expect this holiday season to be highly competitive, and we’re mindful that the entertainment business, which comprises a larger percentage of overall Q4 sales, is up against continued deflation and a lack
of new product innovation. We’ll continue to see pressures to the bottom line as we balance wage leverage with higher customer service standards.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 2042.73 as this post is written

Walmart’s Q2 2015 Results – Comments

I found various notable items in Walmart’s Q2 2015 management call transcript (pdf) dated May 14, 2014.  (as well, there is Walmart’s press release of the Q2 results)

I view Walmart’s results and comments as particularly noteworthy given their retail prominence and focus on low prices.  I have previously commented on their quarterly conference call comments; these previous posts are found under the “paycheck to paycheck” tag.

Here are various excerpts that I find most notable:

comments from Greg Foran, president and CEO of Walmart U.S., page 9:

Let me provide some additional detail. In Q2, net sales for Walmart U.S. grew $1.9 billion. For the 13-week period ended August 1st, we delivered a flat sales comp; and this was despite a SNAP-related headwind of about 70 basis points. Ticket was up 1.1 percent, while traffic was down 1.1 percent, a 30 basis point improvement over Q1. Our e-commerce business, including store-fulfilled sales, delivered double-digit sales growth and contributed approximately 30 basis points to the total Walmart U.S. comp sales growth.

also:

For gross profit, we continued to invest in price, particularly in the categories of meat and health & wellness. That investment, blended with sales mix, resulted in a gross margin decline of 7 basis points versus last year.

comments from Greg Foran, president and CEO of Walmart U.S., page 10:

The combination of gross margin investment and expense deleverage resulted in an operating income decrease of 2.4 percent for Q2. We expect operating income to remain challenged for the balance of this fiscal year, given the increased health-care costs and our commitment to price investment and customer service.

also:

Neighborhood Markets continued to perform well and delivered an approximate 5.6 percent sales comp for the 13-week period. Sales were particularly strong in pharmacy, produce, meat, and adult beverages. Comp store traffic grew 4.1 percent. During Q2, we opened 22
Neighborhood Markets and remain on track to deliver 180 to 200 new units for the year.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1955.18 as this post is written

Financial Situation Experienced By Americans

In the August 7, 2014 post (“Thoughts Concerning The Next Financial Crisis“) I mentioned a “widespread ‘paycheck to paycheck'” situation as well as other signs indicating widespread weak financial wherewithal.

Another recently released report provides details as to the financial situation experienced by Americans.  This report is the Federal Reserve report released August 7, 2014, titled “Report on the Economic Well-Being of U.S. Households in 2013.”  As described in the press release:

In its new Report on the Economic Well-Being of U.S. Households, the Federal Reserve Board provides a snapshot of the self-perceived financial and economic well-being of U.S. households and the issues they face, based on responses to the Board’s 2013 Survey of Household Economics and Decisionmaking. The report provides insight into numerous topics of current relevance to household finances, including: housing and living arrangements; credit access and behavior; education and student loan debt; savings; retirement; and health expenses.

I found many of the statistics contained in the report to be disconcerting, including this excerpt seen on page 18 of the report, contained within the “Emergency Savings” section:

Respondents were asked how they would pay for an emergency expense that came along and cost $400. Just under half (48 percent) reported that they could fairly easily
handle such an expense, paying for it entirely using cash, money currently in their checking/savings account, or on a credit card that they would pay in full at their next statement. The remainder indicated that such an expense would be more challenging to
handle: respondents indicated that they simply could not cover the expense (19 percent); would have to sell something (9 percent); or would have to rely on one or more means of borrowing to pay for at least part of the expense, including paying with a credit card that they pay off over time (17 percent), borrowing from friends or family (12 percent), or using a payday loan (4 percent).

Additional details are found in the report mentioned above.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1920.24 as this post is written

Walmart’s Q1 2015 Results – Comments

I found various notable items in Walmart’s Q1 2015 management call transcript (pdf) dated May 15, 2014.  (as well, there is Walmart’s press release of the Q1 results)

I view Walmart’s results and comments as particularly noteworthy given their retail prominence and focus on low prices.  I have previously commented on their quarterly conference call comments; these previous posts are found under the “paycheck to paycheck” tag.

Here are various excerpts that I find most notable:

comments from Doug McMillon, President and CEO, page 4:

Walmart’s first quarter consolidated net sales increased to more than $850 million or 0.8 percent over last year.  Like other retailers in the United States, the unseasonably cold and disruptive winter weather negatively impacted our U.S. sales and drove operating expenses higher than expected for the company.  This, coupled with the higher than anticipated tax rate, resulted in earnings per share of $1.10.

comments from Claire Babineaux-Fontenot, EVP of finance and treasurer, page 7:

Severe weather in our U.S. businesses negatively impacted EPS by approximately $0.03.  Additionally, the company’s effective tax rate for the quarter was higher than anticipated in the full-year guidance we provided on February 20.  We continue to believe our full-year tax rate will range between 32 and 34 percent.  We may experience quarterly fluctuations in our effective tax rate, as it may be impacted by a number of factors.

comments from Bill Simon, president and CEO of Walmart U.S., page 9:

For the first quarter, we added approximately $1.3 billion in net sales, with relatively flat comp sales.  As we indicated in February, we realized negative comp sales during the first two weeks of the fiscal year from severe winter storms.  A solid start to the spring season and a strong Easter holiday drove positive comps over the remaining 11 weeks of the quarter; that’s despite additional severe weather and about 50 basis points of continued SNAP-related headwind.  Weather impacted Q1 comp sales by approximately 20 basis points.  Overall, our comp sales were down 8 basis points, in line with our guidance.

comments from Bill Simon, president and CEO of Walmart U.S., page 10:

And, of course, we also continued to invest in price, resulting in a net 17 basis point decline in gross profit rate.

comments from Bill Simon, president and CEO of Walmart U.S., page 11:

Neighborhood Markets continue to perform well, delivering approximately a 5 percent comp sales increase for the quarter, driven by a nearly 4 percent increase in comp store traffic.  We’re seeing strength across the box, particularly in produce, meat, adult beverages, and pharmacy.

comments from Bill Simon, president and CEO of Walmart U.S., page 12:

In grocery, we’ve seen a trend improvement despite approximately 90 basis points of headwind from the reduction in SNAP benefits.  Overall grocery inflation is tracking at approximately 120 basis points.  While our consumables business had a low single-digit negative comp, partly due to modest price deflation and overall industry softness, our food business delivered a positive comp.  We’re seeing the strongest results in areas such as meat, produce and dairy, where we’re investing to keep our prices low for customers despite pressure from cost inflation.  Additionally, food delivered strong Easter results, with double-digit sales growth in Easter candy and strength across other categories such as meat and eggs.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1867.43 as this post is written

Walmart’s Q4 2014 Results – Comments

I found various notable items in Walmart’s Q4 2014 management call transcript (pdf) dated February 20, 2014.  (as well, there is Walmart’s press release of the Q4 and Full Year 2014 results)

I view Walmart’s results and comments as particularly noteworthy given their retail prominence and focus on low prices.  I have previously commented on their quarterly conference call comments; these previous posts are found under the “paycheck to paycheck” tag.

Here are various excerpts that I find most notable:

comments from Claire Babineaux-Fontenot, EVP of finance and treasurer, page 9:

Strategic price investment within all three operating segments contributed to a 40 basis point reduction in our gross profit rate, bringing it to 23.9 percent for the quarter.

comments from Claire Babineaux-Fontenot, EVP of finance and treasurer, pages 10-11:

For the 53-week period ended January 31, U.S. comp sales, without fuel, decreased 0.4 percent.

While our gross profit grew 1.5 percent, our gross profit rate declined 3 basis points to 24.3 percent, which reflects our ongoing investment in price, as well as our global merchandise mix.

comments from Bill Simon, president and CEO of Walmart U.S., page 13:

Net sales grew by $1.8 billion or 2.4 percent.  For the 14 weeks ending January 31, comp store sales were down 0.4 percent, with ticket up 1.3 percent and traffic down 1.7 percent.  In the absence of a reduction of government SNAP benefits, which represented approximately 40 basis points of impact to comp sales, we believe the quarter would have been flat.  Additionally, comps were pressured by winter storms, which forced the closure of over 200 stores at some point over the course of quarter.

also:

In addition, we continue to be pleased with the strength of our small formats.  These stores continue to deliver positive comp sales and traffic increases each quarter.  In fact, comp sales, without fuel, for Neighborhood Markets grew approximately 5 percent for the 14-week period.

also:

Gross profit increased 0.8 percent, with our gross profit rate down 41 basis points, driven primarily by a commitment to price leadership.  Our customers rely on us to deliver low prices on the items they want most.  We believe our price investment was a material driver to accelerated share gains and positive comps during the holiday season.

comments from Bill Simon, president and CEO of Walmart U.S., page 16:

Gross profit for the year increased 1.8 percent, with a slight gross profit rate decline.  Price investments were offset by cost of goods savings initiatives.

comments from Bill Simon, president and CEO of Walmart U.S., page 18:

In the first quarter, we expect the retail landscape to remain challenging.  Comp sales were down at the beginning of the 13-week period, due largely to continued winter storms.  However, we’re encouraged by our underlying business trends and anticipate a positive sales comp for the balance of the quarter.  Therefore, we expect a relatively flat sales comp for the 13-week period ending May 2.   Last year’s 13-week comp ending April 26, 2013 was down 1.4 percent.

David Cheesewright, president and CEO of Walmart International, page 20:

Around the globe, the holiday season was softer than we would’ve liked, particularly in our larger markets, as we continue to see customers manage on a relatively tight budget.

Gross profit rate, on a reported basis, fell 53 basis points and on a constant currency basis, decreased 44 basis points.  This was primarily driven by price investments in Brazil, Canada and Mexico.

comments from Charles Holley, CFO, page 38:

  • We delivered over $473 billion in net sales.  E-commerce sales grew over 30 percent to more than $10 billion, including acquisitions.

comments from Charles Holley, CFO, page 41:

Let’s turn to guidance. We expect economic factors to have more negative than positive effect on our outlook. Now, you’ve heard today about some of the factors affecting the U.S. business, including reductions in government benefits, and along with higher taxes and tight credit, these items will continue to weigh on our customers.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1829.11 as this post is written

Walmart’s Q3 2014 Results – Comments

I found various notable items in Walmart’s Q3 2014 management call transcript (pdf) dated November 14, 2013.  I view Walmart’s results and comments as particularly noteworthy given their retail prominence and focus on low prices.  I have previously commented on their quarterly conference call comments; these previous posts are found under the “paycheck to paycheck” tag.

Here are various excerpts that I find most notable:

comments from Bill Simon, president and CEO of Walmart U.S., page 10:

Net sales grew to $67.7 billion, up approximately $1.6 billion or 2.4 percent, while comp sales declined 0.3 percent, driven by a 0.4 percent decline in traffic. Comp traffic was up slightly from the second quarter. Operating income increased 5.8 percent to over $5.1 billion.

comments from Bill Simon, president and CEO of Walmart U.S., page 11:

Let me share more details about our financial results for the third quarter. Our gross profit rate was up slightly at 9 basis points, with gross profit dollars up 2.7 percent. This was less than the 23 basis points increase in the second quarter. We continued to strategically invest in price, funded by cost of goods savings and expense leverage.

comments from Bill Simon, president and CEO of Walmart U.S., page 15:

Each of our formats is rapidly converging with our digital platforms through the continued development of programs like ship from store, Scan & Go, lockers and more. We’re focused on innovative ways to serve the customer, like the grocery delivery test which we recently expanded to Denver. To complement these programs, we’re expanding our endless aisle, giving our customers the ability to shop anytime and anywhere. We’ve more than doubled our online assortment over last year, going from 2 million skus to more than 5 million, primarily driven by Marketplace growth. We’re also investing in our digital platform, building fulfillment facilities to further enable convergence, improve shipping speed and drive supply chain efficiencies.

comments from Bill Simon, president and CEO of Walmart U.S., page 16:

We have robust plans in place to help our customers save money this holiday season. While we’re somewhat encouraged by the momentum coming out of the third quarter, we know the customer continues to be challenged by ongoing uncertainty around healthcare costs, the payroll tax increase and recent SNAP reductions.

Based on these factors, we’re currently forecasting a relatively flat comp in the fourth quarter for the 14 weeks ending January 31, 2014, according to our 4-5-5 retail calendar. Last year’s 14-week comp was up 0.3 percent.

comments from Charles Holley, CFO, page 30:

Last quarter, I told you that our expectations for the back half of the year would be through a lens of cautious consumer spending, and I believe that we’re seeing that play out. In the third quarter, we invested strategically in price across all of our segments, and we made progress on expense leverage. Although it was a challenging quarter from a sales standpoint, we’re encouraged that we continue to manage our business well and deliver consistent solid returns for our shareholders.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1790.60 as this post is written

Walmart’s Q2 2014 Results – Comments

I found various notable items in Walmart’s Q2 2014 earnings call transcript (pdf) dated August 15, 2013.  I view Walmart’s results and comments as particularly noteworthy given their retail prominence and focus on low prices.  I have previously commented on their quarterly conference call comments; these previous posts are found under the “paycheck to paycheck” tag.

Here are various excerpts that I find most notable:

comments from Mike Duke, president and CEO of Wal-Mart Stores, Inc, page 3:

Walmart U.S. comp sales declined 0.3 percent in the 13-week period ended July 26. Traffic improved from the first quarter, and we gained market share in key categories. We continue to invest in price and we are focused on delivering positive comps during the next two quarters.

comments from Bill Simon, president and CEO of Walmart U.S., page 9:

Net sales grew 2.1 percent to $68.7 billion, with about $1.4 billion added in sales year over year. For the quarter, we delivered a negative 0.3 percent sales comp. Traffic decreased 0.5 percent and ticket increased 0.2 percent. The lack of meaningful inflation and the 2 percent increase in payroll taxes impacted our results; however our performance reflects more than a 100 basis point improvement over Q1.

comments from Bill Simon, president and CEO of Walmart U.S., page 10:

Now, let’s cover additional financial details. During the quarter, we continued working with our suppliers to drive cost of goods savings. These initiatives, along with more favorable merchandise mix and logistics productivity, benefited gross profit rate. Overall, our gross profit rate was up 23 basis points, leading to an increase of 2.9 percent in gross profit dollars. We continue to monitor the pricing environment in each market to ensure price leadership, which is the cornerstone of our business strategy.

comments from Bill Simon, president and CEO of Walmart U.S., page 12:

For the quarter, grocery sales, which includes food and consumables, grew by nearly $1 billion. We delivered delivered a slightly negative comp for the retail period. Our results were influenced by lower than anticipated inflation, even deflation in some areas, including dry grocery, frozen and snacks and beverages. Softer performance among these larger categories impacted our overall comp by more than 50 basis points. Adult beverages continued a solid trend of results, delivering a high single-digit comp.

comments from Bill Simon, president and CEO of Walmart U.S., page 15:

I’m particularly pleased with the performance of Neighborhood Markets. We continue to roll out this format aggressively throughout the country, opening more sites in the second quarter than in any other quarter in our history. In fact, we opened 12 stores in just one day this quarter.

comments from Bill Simon, president and CEO of Walmart U.S., page 16:

Given the current economic environment, we expect our comps to be relatively flat in the coming quarter. We remain confident about the back half of the year, as we continue to execute on initiatives to drive our business, and in particular, our top line. The customer remains challenged, but I’m confident in our position and in the ability of our teams to execute. Our strategy is sound, our pricing position is solid and our ability to leverage is strong, all of which bodes well as our comps continue to improve.

comments from Charles Holley, CFO, page 36:

Economic conditions in many of our markets around the world remain difficult. The U.S. retail environment remains challenging, with virtually no inflation in food and the higher payroll tax instituted earlier in the year. High fuel prices can impact spending as well. Our expectations for the back half of the year are through a lens of cautious consumer spending.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1661.64 as this post is written

Walmart’s Q1 2014 Results – Comments

I found various notable items in Walmart’s Q1 2014 earnings call transcript (pdf) dated May 16, 2013.  I view Walmart’s results and comments as particularly noteworthy given their retail prominence and focus on low prices.  I have previously commented on their quarterly conference call comments; these previous posts are found under the “paycheck to paycheck” tag.

Here are various excerpts that I find most notable:

comments from Mike Duke, president and CEO of Wal-Mart Stores, Inc, page 4:

As you know, I like to visit customers in their local markets around the world. I recently traveled to stores throughout South America and the U.S. It’s gratifying to see how important EDLP is for our customers. Our mission is simple and focused – to help people save money so they can live better.

comments from Jeff Davis, EVP of finance and treasurer of Wal-Mart Stores, Inc, page 6:

Gross profit increased 1.2 percent, primarily driven by supply chain productivity and merchandise mix within our U.S. business segments. The gross profit rate was relatively flat to last year.

comments from Bill Simon, president and CEO of Walmart U.S., page 10:

Similar to what you’ve heard from companies in various industries that have reported earnings, top line revenue was challenged by a number of issues. These included a $9 billion reduction in IRS estimated tax refunds versus last year, and we cashed less in income tax refunds than the prior year. Additionally, the 2 percent increase in payroll taxes, reduced inflation and some of the most unfavorable spring weather we’ve seen in recent years across much of the country impacted our business.

also:

In addition, as we gave guidance last quarter, we expected an increase in the level of grocery inflation, but it did not materialize in a meaningful way. We experienced very modest inflation, much lower than last year, and in fact, we had some deflation in areas like dry grocery.

comments from Bill Simon, president and CEO of Walmart U.S., page 11:

Our commitment to the productivity loop is a long-term, sustainable strategy. We will continue to be strategic about the price investments, monitoring competitor price gaps, market share and other data to ensure we maintain an appropriate balance between price investments and margin.

comments from Bill Simon, president and CEO of Walmart U.S., page 16:

This year started with many challenges for our core customer; nevertheless, I’m confident in our position and in the ability of our teams to execute. We believe that our strategy works under any economic environment and our underlying business remains strong.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1667.47 as this post is written

 

Walmart’s Q4 2013 Results – Comments

I found various notable items in Walmart’s Q4 2013 earnings call transcript (pdf) dated January 21, 2013.  I view Walmart’s results and comments as particularly noteworthy given their retail prominence and focus on low prices.  I have previously commented on their quarterly conference call comments; these previous posts are found under the “paycheck to paycheck” tag.

Here are various excerpts that I find most notable:

comments from Mike Duke, president and CEO of Wal-Mart Stores, Inc, page 8:

Walmart leveraged operating expenses again this year. That’s three consecutive years now that we reduced operating expenses as a percentage of sales.

comments from Mike Duke, page 9:

The focus of Bill and his team on cost containment has never been stronger, as Walmart U.S. leveraged operating expenses by 27 basis points this year. We pass the majority of these cost savings to customers every day. Our EDLP promise – along with the broad assortment – is the key to driving sales. Strong merchandising, efficient operations and thoughtful use of capital will keep Walmart U.S. strong into the future.

comments from Mike Duke, page 10:

Fifth, e-commerce. I’m excited about our investments in e-commerce to help us grow with our customers and expand the Walmart shopping experience.

comments from Bill Simon, president and CEO of Walmart U.S., page 16:

Our customers continue to rely on us to deliver Every Day Low Prices. This is evident by our consistent gains in market share across the majority of the businesses.

comments from Bill Simon, page 17:

You heard us talk about the early response to layaway during the third quarter, and I’m pleased to say the momentum continued, with net layaway sales up almost 10 percent for the season versus last year.

comments from Bill Simon, page 21:

You’ve heard us say, supercenters remain our primary growth vehicle, and we will continue to expand this format to drive share.

also:

We also accelerated the small format rollout. In fiscal 2013, we  opened 76 small formats, including Neighborhood Markets and Express stores, allowing us to serve even more customers across the country. In fiscal 2014, we plan to add approximately 100 small stores.

comments from Bill Simon, page 22:

However, February sales started slower than planned due in large part, to the delay in income tax refunds. We began seeing increased tax refund check activity late last week in our stores. This resulted in a more normalized sales pattern for this time of the year.

also:

Due to the slower sales rate in the first few weeks of this year’s first quarter, we’re forecasting comp sales for the 13-week period from January 26 to April 26, 2013 to be around flat.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1505.31 as this post is written