The 'Silent Killer' In Wal-Mart's Business

There's a "silent killer" that became evident in Wal-Mart's earnings announcement today.

"The results announced today are flat-out bad, and its time for shareholders to take management to task for this," said Brian Sozzi, chief equities analyst at NBG Research.

The biggest problem, according to Sozzi?

Sam's Club.

"Sam’s Club now becoming a silent killer to Wal-Mart’s consolidated financials," Sozzi told us. "This comes even as the company has stepped up its price investments."

The buy-in-bulk chain has more than 600 stores in the U.S. While it's grown rapidly in recent years, Sam's Club has still lagged behind competitor Costco.

Wal-Mart's buy-in-bulk chain expects little growth in sales this quarter compared to this time last year, CEO Rosalind Brewer said in the company's earnings release. That compares with a robust 5.3 percent growth last year.

In November, Sam's Club reported that its traffic had slowed down and that when people were buying stuff, they were trading down.

Brewer blames the "mounting economic concerns" for the slow-down in growth for Sam's Club's current woes. In a series of leaked emails, Wal-Mart also blamed the economy for the worst start to a sales month in seven years.

Sam's Club relies on businesses for more of its sales. Its members are generally higher-income than Wal-Mart's.

"Like Walmart U.S., our members are pressured by higher payroll income taxes, ongoing unemployment and higher gas prices," Brewer says in the release.

The expiration of the payroll tax means that Americans began paying 2 percent more in Social Security taxes on their first $113,700 in wages, reports Renee Dudley at Bloomberg. That's $60 a month for someone making $40,000 a year.

The slow-down at Sam's Club is concerning because it shows that businesses and higher-income consumers are just as wary as Walmart's core customers.