Big-Box Retailers Versus the Payroll Tax, Round 1: Safeway Wins

uncle-sam-tax-credit-give-back_366At the end of last week, Bloomberg reported that Jerry Murray, Wall-Mart’s (NYSE:WMT) VP of finance and logistics, sent an email to other executives that contained a few harsh realities. “In case you haven’t seen a sales report these days, February MTD sales are a total disaster,” he wrote. “The worst start to a month I have seen in my ~7 years with the company.”

Shares of the discount retailer quickly dropped 2.2 percent, and the news cast a pall over the markets that had a material impact on the major indices. Disastrous sales at the nation’s largest retailer in February (and January, as previously-leaked emails revealed) suggests a heavy negative impact from the expiration of the payroll tax holiday.

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If American financial belts tighten, then consumer dollars evaporate from the economy. Dollars that were once discretionary are now either going to Uncle Sam or into savings accounts. As a result, big-box earnings released this week gained some extra attention…

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