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Title: HOW WILL 'MERIKA SURVIVE? - Wal-Mart Squeezes Suppliers For Price Cuts As Earnings Sag
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URL Source: http://www.reuters.com/article/2015 ... -insight-idUSKCN0SD0CZ20151019
Published: Oct 19, 2015
Author: By Nathan Layne
Post Date: 2015-10-19 19:51:59 by HAPPY2BME-4UM
Keywords: None
Views: 77
Comments: 15
Suppliers of everything from groceries to sports equipment are already being squeezed for price cuts and cost sharing by Wal-Mart Stores (WMT.N). Now they are bracing for the pressure to ratchet up even more after a shock earnings warning from the retailer last week. The discount store behemoth has always had a reputation for demanding lower prices from vendors but Reuters has learned from interviews with suppliers and consultants, as well as reviewing some contracts, that even by its standards Wal-Mart has been turning up the heat on them this year. "The ground is shaking here," said Cameron Smith, head of Cameron Smith & Associates, a major recruiting firm for suppliers located close to Wal-Mart's headquarters in Bentonville, Arkansas. "Suppliers are going to have to help Wal-Mart get back on track." For the vendors, dealing with Wal-Mart has always been tough because of its size – despite recent troubles it still generates more than $340 billion of annual sales in the U.S. That accounts for more than 10 percent of the American retail market, excluding auto and restaurant sales, and the company increasingly sells a lot overseas too. To risk having brands kicked off Wal-Mart’s shelves because of a dispute over pricing can badly hurt a supplier. On Wednesday, Wal-Mart stunned Wall Street by forecasting that its earnings would decline by as much as 12 percent in its next fiscal year to January 2017 as it struggles to offset rising costs from increases in the wages of its hourly-paid staff, improvements in its stores, and investments to grow online sales. This at a time when it faces relentless price competition from Amazon.com Inc (AMZN.O), dollar stores and regional supermarket chains. Keeping the prices it pays suppliers as low as it can is essential if it is to start to claw back some of this cost hit to its margins. Helped by investments to spruce up stores and boost worker pay, Wal-Mart believes it can grow sales by 3 to 4 percent a year over the next three years, or by as much as $60 billion, offering suppliers new opportunities to boost their own revenues. QUESTIONS NOT ALLOWED The squeeze on suppliers was clear to those selling to Wal-Mart’s Sam’s Club warehouse clubs around April this year. Sam’s Club’s buyers summoned major vendors to meetings and told them a "cost gap analysis" showed they should be delivering at a lower price, and demanded millions of dollars in discounts on future purchases, according to emails reviewed by Reuters and interviews with suppliers and consultants involved in the talks. Unlike in prior talks, which featured give and take, vendors were told they could not ask questions at the meetings, with queries to be handled later via email, according to suppliers and consultants involved in or briefed on the meetings. One food supplier, for example, eventually agreed to cut costs by a few percent, after being asked for a much larger reduction, people familiar with those talks said. Sam's Club said it is continually talking with suppliers in an effort to save costs and lower prices. Spokesman Bill Durling said the company, whose merchant teams are separate from those at the Walmart chain, had recently changed its structure so that one account head now manages the relationship across various products, with the ability to see across the work of multiple buyers. This was done with the aim of improving merchandise and wringing out efficiencies, he said. "There might be unpleasant conversations but ultimately we want to do right by our suppliers because we want to create strategic relationships," Durling said. "We want them to be along with us for the ride as we continue to grow.” NEW FEES SOUGHT In June, vendors to Walmart stores got word of sweeping changes to supplier agreements that seek to extend payment terms in some cases and introduced new fees to warehouse goods and place product in new stores. Then, in recent weeks, Wal-Mart told suppliers producing in China they should share any benefit gained from the decline in the value of the Chinese yuan. Wal-Mart spokeswoman Deisha Barnett stressed that it sees its relationships with suppliers as critical to the company's success. "We will work with every supplier to ensure that terms and agreements are mutually agreed upon," she said. Wal-Mart has told suppliers the new terms are aimed at helping it keep prices low, applying fees more consistently across vendors and bringing its practices in line with industry norms. The charges to store goods in distribution centers and for delivery to new stores are common at other retailers but had not normally been the case at Wal-Mart. The moves followed February’s announcement that Wal-Mart would hike the minimum pay rate for its workers to $9 an hour by April, and to $10 by February 2016. The first move is costing $1.2 billion this year and the second an additional $1.5 billion next year, including other labor costs, such as placing more department managers in stores. The additional expense for its workers is accounting for 75 percent of the projected earnings decline in fiscal 2017. Chief Executive Doug McMillon, who became CEO 18 months ago, and other executives said they are seeing a payoff in the form of improved customer service. Greg Foran, head of the U.S. business, said on Wednesday the company has assessed that two-thirds of its 4,500-plus stores now have a "passing grade" in problem areas - cleanliness, checkout speed, and other factors affecting customer satisfaction. That is up from just 16 percent in February. With its stores in better shape, Wal-Mart now is redoubling its focus on beating competitors on price. Over the next three years, the company said it would spend several billion dollars on keeping prices low. Foran said vendors will benefit. "We lower the cost of goods, which in turn generates savings and we invest that in price. Lower prices see an increase in traffic and basket, which in turn grows sales and gains share," Foran said. Late last year Wal-Mart broke a stretch of six straight quarters without growth in same-store U.S. sales, and logged a 1.5 percent gain in its second quarter ending in July. But that falls short of Target Inc’s (TGT.N) 2.4 percent growth, and Kroger’s (KR.N) 5.3 percent increase, excluding results from sales of gasoline. SLIPPERY SLOPE Wednesday's announcement sent ripples through the supplier community in the Bentonville area, where more than 1,000 have offices to stay close to Wal-Mart. "Now we know why they have been pushing so hard," said an executive at a major consumer goods supplier to both Walmart and Sam's Club, adding that his team was shocked by the projected decline in profits. "Maybe they were banking on more suppliers rolling over on the terms." Wal-Mart's success in boosting profits could hinge in large part on the willingness of suppliers to sign on to its new terms and agree to its price demands. Despite signs of resistance, one consumer goods supplier reckons most will eventually give in to Wal-Mart’s market power, though not without a fight. He pushed back after the retailer asked him for new terms that cut 2 percent off his annual sales. They settled on 1 percent, but he fears further demands down the road. “I just worry that this is a slippery slope of them going in this direction," he said. 
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Wal-Mart's supercenters are struggling as consumers increasingly choose convenience stores over one-stop shops. The retail giant's mega stores suffered a .3% same-store sales decline in the second quarter compared with last year. During the same period, foot traffic for Wal-Mart's U.S. stores fell by 1.1%. By comparison, Wal-Mart's smaller-format stores, or Neighborhood Markets, generated same-store sales growth of 5.6% and traffic increased by 4.1%. "I think convenience is where the consumers have been looking, [especially] if you look at the Baby Boomers," Wal-Mart CFO Charles Holley said on a call with reporters Thursday. The Neighborhood Markets are about one-fifth the size of Wal-Mart's supercenters, and they are located in urban centers — where incomes tend to be higher — while supercenters are typically located on city outskirts. The Markets are devoted to three of Wal-Mart's strongest categories: groceries, pharmacy, and fuel. Groceries account for 56% of Wal-Mart's sales, and research shows that consumers no longer buy food and beverages at one-stop shops. "In the 1990s and the beginning years of this century, the greatest threat to supermarkets and grocery stores came from supersized 'one-stop shopping' venues like supercenters and warehouse clubs," the market research firm Packaged Facts wrote in its most recent annual report on emerging grocery trends. "Today the threat is spread out among all retail channels, including drugstores, dollar stores, limited assortment chains, and — the elephant in the room — e-commerce." On average, consumers shop at five different types of stores to fulfill their grocery needs, according to Deloitte's 2013 American Pantry report. Consumers are carrying this shopping behavior over to other product categories, as well. Instead of relying on a single retailer to give them the best value and assortment, "consumers appear more focused on some combination of value and convenience," Goldman Sachs analysts wrote in a recent research note predicting the slow decline of big-box retailers like Wal-Mart and Target. The rise of online retailers like Amazon has made it possible for consumers to shop and compare prices in a few clicks. Now that an increasing number of retailers are offering free and fast shipping, there are even fewer reasons to step foot inside a physical store. In response to these trends, Wal-Mart is rapidly expanding its Neighborhood Market locations. But its fleet of 400 is still too small to offset the lackluster sales at its 3,300 supercenters. That doesn't mean Wal-Mart is going to start shutting down its supercenters, however. "Supercenters still have one of the highest returns of any [store] format in the company," Holley said. "It would be silly to close a lot of stores with good returns." http://www.businessinsider.com/walmarts-supercenter-sales-decline-2014-8 U.S. Constitution - Article IV, Section 4: NO BORDERS + NO LAWS = NO COUNTRY
One Trillion Dollars in Taxes and Penalties Owed....or More FBI sources indicated that Walmart Corporation had a worldwide banking network that, combined with Bain operations in Cuba, was one of the major political forces in American politics. Under the Supreme Court decision known as “Citizens United,” these offshore corporations laundering Mexican drug cartel cash and with direct ties to terrorist organizations, control the Republican Party. VT has recorded whistleblower interviews that confirm all of this. No agency of any kind, no prosecutor, no court, no grand jury has been willing to listen to testimony or accept documents on this case. A groundbreaking report reveals that Walmart has built a vast, undisclosed network of 78 subsidiaries and branches in 15 overseas tax havens, which may be used to minimize foreign taxes where it has retail operations and to avoid U.S. tax on those foreign earnings. These secretive subsidiaries have never been subject to public scrutiny before. They have remained largely invisible, in part because Walmart fails to list them in its annual 10-K filings with the U.S. Securities and Exchange Commission (SEC). Walmart’s preferred tax haven is Luxembourg, dubbed a “magical fairyland” for corporations looking to shelter profits from taxation. The report, The Walmart Web: How the World’s Biggest Corporation Secretly Uses Tax Havens to Dodge Taxes, is the first-ever comprehensive documentation of the company’s use of tax havens. The full report is available here, and for the report’s Key Findings, click here. Most people know that Walmart is the world’s biggest corporation. Virtually no one knows that Walmart has an extensive and secretive web of subsidiaries located in countries widely known as tax havens. Typically, the primary purpose for a corporation to set up subsidiaries in tax havens where it has little to no business operations and few, if any, employees is to pay little, if any, taxes and to maintain financial secrecy. Walmart has established a vast and relatively new web of subsidiaries in tax havens, while avoiding public disclosure of these subsidiaries. All told it has 78 subsidiaries and branches in 15 offshore tax havens, none of them publicly reported before. They have remained invisible to experts on corporate tax avoidance in part because of the way Walmart has filed information about them to the U.S. Securities and Exchange Commission (SEC). Walmart may be skirting the law as there is a legal requirement to list subsidiaries that account for greater than 10 percent of assets or income. It has 22 shell companies there – 20 established since 2009 and five in 2015 alone. Walmart does not have one store there. Walmart has transferred ownership of more than $45 billion in assets to Luxembourg subsidiaries since 2011. It reported paying less than 1 percent in tax to Luxembourg on $1.3 billion in profits from 2010 through 2013. Walmart has made tax havens central to its growing International division, which accounts for about one-third of the company’s annual profits. At least 25 out of 27 (and perhaps all) of Walmart’s foreign operating companies (in the U.K. Brazil, Japan, China and more) are owned by subsidiaries in tax havens. All of these companies have retail stores and many employees. Walmart owns at least $76 billion in assets through shell companies domiciled in the tax havens of Luxembourg ($64.2 billion) and the Netherlands ($12.4 billion) – that’s 90 percent of the assets in Walmart’s International division ($85 billion) or 37 percent of its total assets ($205 billion). There is evidence that Walmart uses its subsidiaries in tax havens to pursue well-known international tax-avoidance strategies: Walmart appears to be playing a long game – from tax deferral to profit windfall. It is using tax-haven subsidiaries to minimize foreign taxes where it has retail operations and to avoid U.S. tax on those foreign earnings. Walmart apparently hopes the U.S. Congress will reward its use of tax havens by enacting legislation that would allow U.S.-based multinationals to pay little U.S. tax when repatriating current low-taxed foreign earnings (such as to fund infrastructure spending) and pay no tax with the adoption of a territorial tax system. U.S. and foreign authorities should investigate Walmart’s tax avoidance. Among the issues to pursue: U.S. Constitution - Article IV, Section 4: NO BORDERS + NO LAWS = NO COUNTRY
Only question is, how long will it be before the collapse?
Isn't that what it's all about? ;) "When bad men combine, the good must associate; else they will fall, one by one." Edmund Burke
Nobody knows. War solves a lot of problems. World war solves everything. Historically, global money depressions immediately precede global war. U.S. Constitution - Article IV, Section 4: NO BORDERS + NO LAWS = NO COUNTRY
Walmart, like anyone else, should pay tax for services received, not for wars for Israel or any other kind of nonsense the government engages in.
Wal-Mart, 2nd Amendment Prohibitionist: August 2015 - Walmart Bars Sales Of AR-15s, Self-Defense Shotguns September 2015 - Walmart Gives Up On Second Amendment Wal-Mart, Confederate Heritage Prohibitionist: [See also, 4um Title: The New Cultural Marxism and the Infantilization of College Students] Boycott Wal-Mart, et al of the Commie Culturati: Ref. Post #39 of 4um Title: "How the South Skews America" ------- "They're on our left, they're on our right, they're in front of us, they're behind us...they can't get away this time." -- Col. Puller, USMC
Short story: my BIL (RIP) a rather big-dog with P&G told us how he absolutely hated the annual trip to Bentonville to negotiate the pricing of all P&G products that they stocked. He said that it was just brutal compared with dealing with the ME countries where they bought the entire countries' stock of Crest, Pampers, Tide, etc that P&G makes by the boat-load. No problem. “The most dangerous man to any government is the man who is able to think things out... without regard to the prevailing superstitions and taboos. Almost inevitably he comes to the conclusion that the government he lives under is dishonest, insane, intolerable.” ~ H. L. Mencken
A business decision -- that's supposed to mean something was hurting business. But commies like the Walmartians just say it to cover their crimes, sort of like Janet Reno simultaneously denying anything went wrong at Waco* and getting on TV to meaninglessly declare "I accept full responsibility for what happened!" This Onion routine from a few years back is right on the mark: Hostages Trapped Inside Walmart Insisting They Never Shop At Walmart *or WACO, as people thinklessly put it
WACO -- that actually works: Women And Children Obliterated.
He said that it was just brutal compared with dealing with the ME countries where they bought the entire countries' stock of Crest, Pampers, Tide, etc that P&G makes by the boat-load. No problem. ================================================== There are many, many testimonies of WalMart ruining people who they 'contracted' to do bidness with. U.S. Constitution - Article IV, Section 4: NO BORDERS + NO LAWS = NO COUNTRY
Absolutely correct. They don't give a shit if you go tits-up in a year or so as long as they get their deal today. And way too many are ignorant enough to still do business with them, on their terms. “The most dangerous man to any government is the man who is able to think things out... without regard to the prevailing superstitions and taboos. Almost inevitably he comes to the conclusion that the government he lives under is dishonest, insane, intolerable.” ~ H. L. Mencken
They also break contracts. Their answer 'sue us.' They are 'laying off' quite a few at their corporate office in Bentonville. You heard it here first. U.S. Constitution - Article IV, Section 4: NO BORDERS + NO LAWS = NO COUNTRY
Their new idea of paying 1/4 of a decent, though low-paying, wage is having corporate repercussions. They have the jack to work through this; look at Costco and see how well they're doing paying good wages to their employees! Plus, it's a nicer, cleaner, happier store to shop in! “The most dangerous man to any government is the man who is able to think things out... without regard to the prevailing superstitions and taboos. Almost inevitably he comes to the conclusion that the government he lives under is dishonest, insane, intolerable.” ~ H. L. Mencken
I don't necessarily want WM to fail. What I do want (which will NEVER happen) is to bring back American industrial independence. One small example: Guess who makes the oil rig equipment that drills the oil out of the ground that makes the gas you put into your car? hint: NOT americans. U.S. Constitution - Article IV, Section 4: NO BORDERS + NO LAWS = NO COUNTRY
Wal-Mart's Supercenters Are Becoming A Major Problem
#2. To: All (#1)
Walmart Web: How World’s Biggest Corporation Secretly Uses Havens to Dodge Taxes
By www.americansfortaxfairness.org
Editor’s note: In 2012, VT received information from sources within the Federal Bureau of Investigation exposing ties between Walmart, Bain Capital (Mitt Romney) and Carlos Salinas’ Gulf Cartel, the largest narcotics organization in the World.
Key Findings
Luxembourg, dubbed a “magical fairyland” by one tax expert because of its ability to shelter profits from taxation, has become Walmart’s tax haven of choice. 
#3. To: HAPPY2BME-4UM (#0)
#4. To: HAPPY2BME-4UM (#2)
avoid U.S. tax
#5. To: Cynicom (#3)
#6. To: HAPPY2BME-4UM (#0)
#7. To: HAPPY2BME-4UM (#0)
January 2013 - BREAKING & CONFIRMED: Wal Mart Is NOT Going To Order Any More Ammo.
4um Title: "WHAT DID YOU EXPECT? - GLOBALISTS ARE NOW RUNNING IT - Walmart to ‘melt’ class rings bearing Confederate flag rather than complete orders"
the retailer made a “business decision” to stop selling [Confederate flag] items
Post #15 of 4um Title: "Hattiesburg Mayor orders removal of state flag" frankly, the whole thing reminds me a little of the Red Guard of China, with our new Red Guard seeking to erase the vestiges of the past in order to create a brave new world." ... The Red Guards were also tasked with rooting out ... those with supposed 'right wing' views ...Many were ousted from official posts such as university teaching
#8. To: HAPPY2BME-4UM (#0)
#9. To: GreyLmist (#7)
(Edited)
#10. To: NeoconsNailed (#9)
#11. To: Lod (#8)
Short story: my BIL (RIP) a rather big-dog with P&G told us how he absolutely hated the annual trip to Bentonville to negotiate the pricing of all P&G products that they stocked.
#12. To: HAPPY2BME-4UM (#11)
(Edited)
#13. To: Lod (#12)
#14. To: HAPPY2BME-4UM (#13)
#15. To: Lod (#14)
(Edited)
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