Wal-Mart Just Revealed How Poor Its Customers Are

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Wal-Mart listed a new risk factor.


Nestled in the latest annual report from Wal-Mart Stores Inc. is a line that underscores just how much the world’s largest general merchandise retailer and its shareholders have depended on public assistance programs in recent years.


The Bentonville, Ark., company’s report for its fiscal year ended Jan. 31 includes the cautionary statement that’s required under securities regulations from all publicly listed companies. The purpose is to inform the public of factors that could harm future profitability. Such statements are routine and tend to list just about any potential risk factor. In Wal-Mart’s case, the sentence disclosing risk factors is a staggering 668 words long and includes dozens of risks, including natural disaster, civil unrest, changes to income and corporate tax rates, and ongoing investigations against the company.


A couple of items stand as newcomers to Wal-Mart’s menu of risks. Here’s what the annual report released on Friday says:


“Our business operations are subject to numerous risks, factors and uncertainties, domestically and internationally, which are outside our control … These factors include … changes in the amount of payments made under the Supplement[al] Nutrition Assistance Plan and other public assistance plans, changes in the eligibility requirements of public assistance plans, …”


In other words, Wal-Mart, for the first time in its annual reports, acknowledges that taxpayer-funded social assistance programs are a significant factor in its revenue and profits. This makes sense, considering that Wal-Mart caters to low-income consumers. But what’s news here is that the company now considers the level of social entitlements given to low-income working and unemployed Americans important enough to underscore it in its cautionary statement.


For the fourth quarter ended Jan. 31, Wal-Mart said it earned $4.43 billion, a drop of 21 percent from a year earlier. The company cited

Read more: http://www.businessinsider.com/wal-mart-says-food-stamps-are-a-risk-2014-3#ixzz2xGU2dpJ9

See on www.businessinsider.com


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