U.S. job rebound not spurring spending, Wal-Mart's Simon says

Reuters

Published Jul 07, 2014 08:55PM ET

U.S. job rebound not spurring spending, Wal-Mart's Simon says

By James B. Kelleher

BENTONVILLE Arkansas (Reuters) - U.S. employers may be hiring again, but the job market recovery is not giving ordinary consumers enough confidence to increase their spending, a top Wal-Mart (N:WMT) executive said on Monday.

In an interview with Reuters, Bill Simon, the president and chief executive officer of Wal-Mart U.S., said the improving employment picture had so far failed to raise cash register receipts at the retailer's U.S. stores.

"It's really hard to see in our business today … that it's gotten any better," he said.

"We've reached a point where it's not getting any better but it's not getting any worse – at least for the middle (class) and down."

Last week, the U.S. Labor Department reported that U.S. employment growth jumped in June, and the jobless rate closed in on a six-year low.

The news, which was seen as proof the U.S. economy was finally growing briskly after years of a lackluster recovery, helped send the Dow Jones Industrial Average above 17,000 for the first time.

Simon said Wal-Mart's lower- and middle-income customers appeared to have made a number of changes to their shopping habits that were "not the best thing in the world for a retailer," splurging on events like back to school and holidays like the Fourth of July, but pulling back spending in between.

"They're adapting to what has been a difficult macroeconomic situation," he said.

In May, Wal-Mart Stores Inc said its profit fell nearly 5 percent in the first quarter and forecast weaker-than-expected second-quarter earnings, citing among other things the continued financial struggles of its lower-income customers.

At least one in five of Wal-Mart's customers relies on federal government assistance to help buy groceries and other goods at the retailer's more than 4,000 U.S. stores.