Wal-Mart Holiday Sales Will Be Flat: Trussell

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Nov. 14 (Bloomberg) -- Paul Trussell, an analyst at Deutsche Bank Securities, discusses Wal-Mart's struggles with Mark Crumpton on Bloomberg Television's "Bottom Line." (Source: Bloomberg)

Inflicted or are they result of a slow economy?

I think it is a thuggish economy.

Their core customer is facing a number of challenges.

With her it has been the payroll tax hike, there have been sluggish drive growth and i think in general, walmart's core customer really has a hard time making ends meet especially when it comes to buying products on the discretionary side of the store.

Some of walmart's are low income customers.

The sequester, the tax hike, they got hit particularly hard.

Absolutely.

There has been a little bit of relief lately with gasoline prices falling, being down year- over-year, but otherwise, i think it has been headwind after headwind all year long.

Wal-mart's u.s. same-store sales have slid for three straight quarters.

What is the cause and can walmart regroup?

I think there is also in addition to economic challenges, i think walmart has lost some of its competitive advantages.

Some of the smaller stores such as the dollar stores, drugstores and convenience players as well as online efforts from amazon have really come and start to take some share especially on the consumable side.

What do walmart numbers mean today for competitors?

We think the dollar stores are still doing right well.

Despite what we saw from walmart, we continue to see mid single-digit growth out of the dollar stores such as dollar tree and dollar general.

Paul, according to an e-mail obtained by bloomberg news, walmart scale back orders for suppliers for the third and fourth quarters to keep the inventory from rising too quickly.

Is the company managing its inventory position appropriately?

It has been a challenge for them.

Sales have been so sluggish.

At the same time, they are dealing with trying to be very aggressive on certain categories ahead of the holidays.

While sales are falling, they are also trying to prepare those stores for what they hope will be a very busy holiday season.

What are they doing in the preparation?

In preparation for the holidays, they have already launched their layaway program.

They have already ran a black friday online offering.

These stores, despite it still being a few weeks before black friday, already have full assortment of toys and jewelry and other gifts.

How is that layaway plan helping wal-mart bottom line?

It has proven to be very popular.

It is popular.

At this point in time, i don't get the sense that they are actually making money on the layaway program.

Frankly, it is a tool used to really just continue to capture customer trips and really have that -- keep that customer from fleeing to other stores.

At this point, walmart is having trouble keeping its shelves adequately stocked because they have a smaller workforce at this point.

That is turning off customers.

Some of them are going to some of walmart's rivals.

Our wal-mart's customers -- will they come back?

What is the company going to have to do to get them to come back in the stores?

Customers are very loyal but if they feel things are not going well, if they see a whole bunch of anti-store shelves, they are going to turn their backs.

They may not come back.

That is absolutely fair.

Walmart has always been about price and assortment.

They still do that better than any other big-box retailer in the u.s. you will see this holiday, them emphasizing even more so, that they have a wider array of gifts for the holidays, toys for the kids.

They will be very aggressive on taking those price points lower.

In september, walmart said that it was hiring 55,000 seasonal workers and adding an additional permanent 70,000 part-time and full-time workers to gear up to the holiday season.

What are you expecting from walmart beginning on black friday?

I expect them to be very aggressive on all those key categories for the holidays.

Quite frankly, i honestly am expecting flattish sales growth in the fourth quarter.

Given how challenging they are and how restrictive the wallets are of their core customers, we are unlikely to see growth this year.

At this point, consumer sentiment being what it is, americans still a little bit hesitant to do away with their discretionary income even around the holidays?

We are seeing better sales growth at higher income retailers.

Those that cater to mid to upper and customers, nordstrom, macy's are doing a bit better.

Those customers that have home equity, that are participating in the stock market, they are certainly spending better and have higher confidence levels than wal-mart's core customers.

Paul is deutsche bank's retail analyst, a hold

This text has been automatically generated. It may not be 100% accurate.

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