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Wal-Mart Plays the Obamacare Card

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Wal-Mart (NYSE: WMT  ) may be making waves this week for the story that broke about a store in Ohio that organized a food drive for its own employees, but the world's largest retailer is lining up scapegoats of its own heading into this very uncertain holiday shopping season.

"While it is not coming through in our customer research, we do know that some of our customers are concerned about the impact of the Affordable Care Act," the company told analysts during last Thursday's earnings call. "For many of our customers, having to afford health care and insurance may be another line item in their personal budget that they may not have had to cover previously."

Wal-Mart isn't the first company to bellyache about the changing health-care landscape, but the gripes are usually along the lines of the additional costs that they will face as businesses. Wal-Mart is now presenting this touchy political subject as a factor that may dry up sales early next year when Americans will have to pay financial penalties if they're not insured.

This may seem an odd retailer to be bringing up Obamacare's impact on sales. Isn't Wal-Mart a magnet for the less-affluent who want to get more bang for their bucks? Medicaid and other subsidies will be available to the poor. The financial burden of bringing coverage to roughly 25 million uninsured people will fall largely on corporate America and the other classes until the ultimate goal of driving down overall health care costs is achieved. 

However, that's a flawed assumption when it comes to Wal-Mart. Yes, it's a beacon for the less affluent, but the retailer claims that 60% of the U.S. shops at Wal-Mart in any given month. That's more than half the country!  

The new penalties don't kick in until the end of March after a three-month grace period, but Wal-Mart's fear seems to be that some customers may hold back on their holiday spending until they get a clearer picture of what their budgets will look like come early 2014. There may be some truth to that, but it's hard to get excited about a retailer that has been a disappointment in terms of store-level comps for several years now. Wal-Mart's problems won't be made any easier by Obamacare, but it's not as if it wasn't struggling to drum up sales before any of this materialized.

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Read/Post Comments (2) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 20, 2013, at 1:09 AM, Corsair3117 wrote:

    Be careful when you use terms like "scapegoating" when our Redistributor in Chief has launched his own (surprise, surprise) scapegoating of the private sector is assessing blame as his Ponzi Scheme craters. Look at Medicare's cost, exponentially higher than its advocates claimed at it's inception, as the model for "until the ultimate goal of driving down the costs of health care are achieved" Time frame for Big Rock Candy Mountain? When hell freezes over. Let's see "We'll add 30 mil people to health care without raising taxes a dime and you can keep your plan if you like it". Hmmm. Not the season for veracity, I guess. Seems a tad of "bellyaching" to borrow your pejorative is shared by many outside the Walmart board-room.

  • Report this Comment On November 20, 2013, at 9:20 AM, misterfrost wrote:

    When you let Nazi wannabes takeover you should expect these things..Rome is burning people..let's bring the Republic back..separate Wallstreet from DC..even if we have to do it from the neck down..

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9/30/2016 4:00 PM
WMT $72.12 Up +1.39 +1.97%
Wal-Mart Stores CAPS Rating: ***