Walmart Can't Blame American Consumers For Its Problems

The company is blaming wary consumers for its problems.

"The retail environment remains challenging in the U.S. and our international markets, as customers are cautious in their spending," Chief Financial Officer Charles Holley said in a release today.

But there's a hole in Wal-Mart's logic, notes Brian Sozzi, chief equities strategist at Belus Capital Advisors.

"Wal-Mart is investing billions of dollars to lower merchandise prices and as noted by the company, food deflation is front and center on the shelves," Sozzi wrote in a research note. "Theoretically, the Wal-Mart consumer should have slightly more spending power, not less."

So what is to blame for the slowdown in Wal-Mart's business?

Wal-Mart's ambitious investing overseas and in e-commerce, Sozzi said.

The company has spent the past several years aggressively building stores around the world, to mixed success. It also has been working to catch up to Amazon online.

"Investments to address international, from uncompetitive prices and poorly laid out stores, continue with no visible sign they are driving improved results, while the company is pouring large sums of money into ecommerce to compete with Amazon," Sozzi writes.

And, the results show that the U.S. market is doing fine, while international took a loss.

Wal-Mart has implied that when consumer outlook improves, business will too.

But as Sozzi notes, there are many other areas it needs to work on.