Wal-mart Stores, Inc. declared an interesting factor in their bottom line when they filed their Form 10-K with the Securities and Exchange Commission on Friday. The world’s largest retailer officially admitted that certain changes in government assistance programs, especially the Supplemental Nutrition Assistance Program or SNAP, could affect its profit margins.
Wal-mart’s 10-K stated that their business is affected by a number of domestic and international factors and risks, which are beyond their control. It added that “any one, or a combination” of these factors and risks could significantly affect the overall financial performance of the company.
The form singled out modifications in the “amount of payments under the Supplemental Nutrition Assistance Program,” which is more popularly known as the Food Stamp Program. Federal aid policy on these types of assistance plans also include eligibility requirements for potential beneficiaries. In addition, Congress has yet to renew the policy on extended jobless benefits that ended at the end of 2013.
Web-based international news provider International Business Times reported that this is Wal-mart’s first admission of its dependence on government assistance programs as a crucial factor in its revenue. On the other hand, Wal-mart has mentioned the effects of the Food Stamp Program in the past. At the beginning of 2013, the company said that their profits declined after the stimulus boost to SNAP benefits expired in November.
Welcome to America: Walmart blames cuts in SNAP/food stamps for lower sales http://t.co/P9l7rb3I8a (PDF) pic.twitter.com/1nHTkveWmu
— Brandon Wall (@Walldo) February 1, 2014
Wal-mart is known for its low prices, which caters mostly to customers with below-average incomes. According to research studies, one-fifth of American Wal-mart customers do not possess a bank account. As a result, a huge chunk of Wal-mart’s customer base makes use of food stamps to purchase items from the store. Moreover, although the store is known as one of the largest retailers, most of their employees tend to rely on welfare.
This SNAP program is the largest nutrition assistance plan in the U.S., which has served approximately 40 million poor Americans in the past years.
A discussion about Wal-mart and SNAP
Image via YouTube