SACRAMENTO - Retail giant Wal-Mart is experiencing a drop in sales and is forecasting a decline in revenue for the remainder of the year.
The drop in Wal-Mart's sales not only came as a shock to consumers accustomed to seeing large profits from the retail giant, but also retail industry analysts who are now offering their opinions on why the sales decline is happening.
Some are saying consumers are curbing their spending because of higher taxes and gasoline prices leaving them with less money in the bank.
Others speculate the cuts in federal spending are part of the problem.
Last week, shares of Wal-Mart were down 2.4 percent and the sales at U.S. stores fell 0.3 percent in the second quarter. Wall Street analysts were expecting a gain of one percent.
One analyst said this is just more proof of the growing divide between rich and poor, and that the lower class is really hurting.
Wal-mart is not alone. Macy's, along with other retailers are also projecting a drop in sales for the remainder of the year. And it comes even as some stores tried to increase back-to-school sales by releasing ads back in June.
The latest retail sales data also shows that when it comes to the big-ticket items, consumers still remain cautious. Sales of cars and trucks, which were actually doing well this year, slowed in July, along with purchases of furniture, electronics, and appliances.
Wal-mart is facing more competition from stores experimenting with the low-price strategy, as well as from online outlets catering to lower income shoppers.