Walmart struggled at the end of last year. But according to the retailer's new estimations, it wasn’t because people didn’t want to buy. It was because they couldn’t.
The retail giant warned Friday that the effect of last year's national food stamp cuts on its bottom line will likely be deeper than the company previously estimated. As a result its comparable same-store sales -- a retail metric that measures how stores are doing year over year -- will likely be slightly down for the fourth quarter.
“The sales impact from the reduction in SNAP [the U.S. government Supplemental Nutrition Assistance Program] benefits that went into effect Nov. 1 is greater than we expected,” Walmart’s Chief Financial Officer Charles Holley said in a news release Friday. “And, second, eight named winter storms resulted in store closures that impacted traffic throughout the quarter.”
The GOP-led push to cut food stamps benefits to the tune of $5 billion left 47 million Americans reeling during a time of near record-level food insecurity.
Because about 18 percent of all total food stamp dollars are spent at its stores, according to an October report from the Wall Street Journal, Walmart can serve as a way to gauge how Americans are coping.
Walmart executives were cautiously optimistic about the effects of the cut on Walmart's bottom line last year. "Everybody's benefit is going to get cut, price will become more important. And when price is more important, we're more relevant," Bill Simon, the retail giant’s U.S. CEO, said in October. He noted that Walmart’s market share actually decreased when the food stamp program initially expanded in 2009.
But the opposite hasn't held true so far, indicating that the poorest Americans are so pinched they can’t even afford to shop at the cheapest retailers. Family Dollar, another typical destination for Americans in a squeeze, also reported disappointing earnings earlier this month, which they blamed on factors including food stamp cuts, high unemployment and the payroll tax increase.