In Wal-Mart's Earnings Report, A Lesson On The Tax Code

The New York Times points out something rather interesting about an otherwise mundane business story. Wal-Mart's fourth-quarter earnings report tells the tale of how changes in the tax code has both helped corporations and hurt them.

As the Times puts it, during the fourth quarter of last year, "the tax code gave and the tax code took away."

The paper explains:

"The company reported higher-than-expected fourth-quarter earnings on Thursday of $1.67 a share, up from $1.51 a share a year ago, largely because of tax credits that brought its corporate tax rate lower than usual.

"But the recent payroll-tax increase and an Internal Revenue Service delay in processing tax returns hit consumers, and that affected the holiday period and sales in February. For the fiscal fourth quarter, which ended Jan. 31, sales at stores open at least a year rose 1 percent at Wal-Mart stores in the United States; analysts had expected a 1.7 percent increase."

The earnings report today adds a bit of context to the internal emails published by Bloomberg last week.

In them company executives worried about early February sales which Jerry Murray, Wal-Mart's vice president of finance and logistics, said were "a total disaster."

In another email Cameron Geiger, senior vice president of Wal-Mart U.S. Replenishment, wonders, "Where are all the customers? And where's their money?"

The official word from the earnings report, this morning, was less dire.

According to CNN Money, Wal-Mart U.S. CEO Bill Simon told investors that the company was well aware that that payroll-tax increase was affecting its customers.

"Customers know about it and are adjusting," he said. "We don't have a clear vision of how they'll continue to behave throughout the year."