Leaked emails from Walmart (WMT) executives caused a number of retail stocks to drop sharply last week.
Jerry Murray referred to the company's February sales up to that point as a “total disaster.” The market reacted quickly as the sentiment confirmed fears that low-end consumers would be particularly hard by the two-percent payroll tax increase that took effect at the beginning of the year.
Thursday though, Walmart CEO Bill Simon blamed the slow start to February on a delay in income-tax return checks and said sales have started to pick up over the past week, “resulting in a more normalized weekly sales pattern for this time of the year.”
The company left the door open to casting blame for weak sales going forward on the payroll-tax increase, but for now it seems like the doomsday scenario that appeared to be coming true a week earlier was only a mirage.
Walmart is the nation's largest retailer, and as such its results can tell us a lot about the health of the economy. On the other hand, Walmart relies heavily on down-market consumers. These shoppers have less disposable income and as such to be more sensitive things like the payroll-tax increase or rising gas prices. This mean Walmart may be more sensitive to some events than other retailers.
Chart courtesy of stockcharts.com.
I've compiled a list of retailers that I think could outperform Walmart in the current environment.