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Wal-Mart shoppers still cautious even as job market improves

<h1>Wal-Mart Stores</h1>
<h1>Wal-Mart Stores</h1>
<h1>Wal-Mart Stores</h1> Courtesy: Walmart

Glowing employment reports have yet to bring U.S. shoppers into stores, leaving retailers waiting for the trickle down effect of new jobs on consumer spending, one of Wal-Mart’s c-suite executives said Monday.

“We’ve reached a point where it’s not getting any better, but it’s not getting any worse,” Bill Simon, president and CEO of Wal-Mart U.S., told Reuters. “At least for the middle (class) and down.”

Simon said that Wal-Mart’s (WMT) U.S. stores have struggled to see the benefit from new jobs in their sales numbers.

Meanwhile, the U.S. Labor Department reported that the unemployment rate has fallen to 6.1% in June, the lowest rate in six years. The great jobs report, which signaled that the economy is finally picking up steam after a less-than-stellar recovery, pushed the Dow Jones industrial average above 17,000 for the first time ever last week.

But consumer confidence hasn’t reached the level where lower- and middle-income shoppers are ready to head to the cash registers like in the pre-recession days, Simon noted.

“People think we do better in a down economy,” Simon said. “We don’t. We do better when GDP is growing, when the economy’s good.”

Those Wal-Mart customers changed their shopping habits during the recession in a way that were “not the best thing in the world for a retailer,” said Simon. Customers splurged during events such as back to school and July 4, but held back in between.

“We saw robust growth periods as people celebrate,” Simon said on CNBC. “And then the figure out how to deal with a difficult economic situation or flat household income.”

The effects continue to show in the retailer’s earnings. Wal-Mart’s profit dropped about 5% in the first quarter this year, and the company said its second quarter earnings would be weaker than expected.

In a bright spot for the world’s largest retailer, small store sales have seen “robust” growth, said Simon. Same store sales for Wal-Mart’s neighborhood markets expanded 5% last year.

For the first year ever, Wal-Mart will build out more of these smaller-format stores than Supercenters as the company adapts to buyers’ changing shopping habits.