Wal-Mart’s Problems Point to Deeper Issues in US Economy

(Before It's News)

schiffgold.com / BY SAMUEL BRYAN / OCTOBER 15, 2015 

The giant retailer announced Wednesday that profits could drop as much a 12% in the next year. It’s stock plummeted 10% on the news. Company officials also warned they now expect sales growth for the current fiscal year to be flat. In February, the company predicted 1 to 2% growth.

According to the Wall Street Journal, the cost of recent wage increases is weighting heavily on the company’s profit margin:

For the first time Wednesday, Wal-Mart detailed next year’s costs of raising wages for its more than one million store workers. In April, the company raised the minimum hourly wage it pays those employees to $9, and will raise that to $10 for most in February. The higher pay will add $1.2 billion to costs this year and another $1.5 billion next year, the retailer said.”

But Wal-Mart’s problems aren’t just increasing costs. Sales revenue is also expected to drop, according to a Reuters report.

Wal-Mart Stores said current fiscal full-year sales would be flat due to the stronger-than-anticipated impact of the dollar. It had previously forecast net sales growth of 1-2 percent for the current fiscal year ending January.”

The mainstream financial media generally spun Wal-Mart’s problems as purely Wal-Mart problems. But as Peter Schiff pointed out in his podcast, the giant retailer may well be the “canary in the coal mine,” warning of more generalized economic issues.

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