Wal-Mart’s (WMT) surprise drop in sales caused considerable tension in the market, as stocks took their biggest five-day tumble of the year last week. This unsettling news could have serious ramifications for investors of every stripe. So what gives?
Wal-Mart’s recent trouble may be due to lower income consumers having trouble with cash flow. During the same quarter, car sales have been very strong, as has consumer discretionary spending. It may be that people are simply putting their money elsewhere.
Or, the problem may be with Wal-Mart itself. The company has been criticized for years about the dismal conditions at its stores, poor wages and declining customer satisfaction. According to Bloomberg Businessweek, Wal-Mart placed last among discount stores in the American Customer Satisfaction Index, the sixth year in a row the company has either tied or taken the last spot. It could be that shopping at Wal-Mart just isn’t fun anymore.