A planned delay in the delivery of two tax refunds could be taking a bite out of Wal-Mart‘s revenue.
After reporting another quarter of top-line growth during the holiday period, the world’s largest retailer said sales have gotten off to a slow start in its new fiscal year.
Later delivery of the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit could be to blame. Congress passed a measure to delay these refunds, which benefit low- to middle-income households with children, back in 2015. The holdup was designed to give the IRS more time to track down fraudulent claims.
Jefferies estimates this delay has resulted in roughly $45 billion less income than the same time last year. Refunds are expected to begin trickling in next week, meaning Wal-Mart should have a better sense of the impact from their delays in coming weeks, CFO Brett Biggs said.
“We continue to run our plan,” the company said.
Wal-Mart expects comparable sales for the 13-week period ending April 28 to increase between 1 percent and 1.5 percent. That would mark the 11th consecutive quarter of growth for that key metric.
The retailer’s same-store sales rose 1.8 percent in the fiscal fourth quarter, marking their biggest gain in more than four years.