Before the opening bell this morning, WMT issued a press release saying that the July quarter of its fiscal year (ending January of the following calendar year (like most retailers do)) will be weaker than it initially thought.

Higher prices for gasoline and food have left WMT customers with less money to spend on other items. The company is apparently doing fine in whittling down its excess inventories of durable goods like TVs and kitchen appliances. And the company’s grocery business is doing unusually well. It’s apparel that’s the problem.

Two things to keep in mind in generalizing from WMT:

–although WMT is the country’s largest retailer, it has limited presence in California and the Northeast. In the case of New England and New York/New Jersey, the Arkansas-based company came to this densely populated area relatively late. So WMT has had problems finding good locations for its stores. In California, local merchants lobbied very effectively to keep Walmart out. The company’s roots are in supercenters on the outskirts of towns with populations of under 250,000. It has had less success in penetrating the largest urban areas.

–in terms of income WMT’s customer base (average annual earnings: $48,000) is situated between Target ($80,000) on the higher end and the dollar stores ($40,000) on the lower, and overlaps with both. Its typical customer tends to be older than for either of the others.

So even though WMT is much larger than any of its rivals, it’s not a perfect mirror of all American consumer spending.

It’s not 100% clear, either, what the falloff in spending on apparel at WMT means.

Let’s say the company offers three kinds of blue jeans:

–no-name, not well-made, won’t last a long time jeans for $10

–average, ok-made, won’t fall apart tomorrow jeans for $20, and

–high-end, national brand, maybe with fancy pockets or rivets jeans for $30.

In bad times, WMT sells mostly $10 jeans; when customers are feeling flush, it’s mostly $30 jeans. Since production and distribution costs aren’t all that different, the $30 jeans are much more profitable. They’re also the riskiest, if fashions change or if the economy weakens.

My guess is that the combination of back-to-work, higher interest rates and spiking energy prices has moved us from a $30 jean world to a $10-$20 world much faster than WMT buyers foresaw and that the company didn’t discount the former deeply/quickly enough once it realized what was happening. And it doesn’t have enough of the $10 – $20 jeans customers want.

If so, the preannouncement has roots partly in macroeconomics, partly in a company-specific merchandising mistake. We’ll learn more when Costco and Target report.