Wal-Mart Stores Inc. (NYSE: WMT) is the king of retailing, with the largest presence of all retailers with more than 2 million workers and with what may be as much as $500 billion in sales next year. Now the company is effectively hitting a second speed bump in recent weeks. Reports are out that Walmart is cutting orders from many of its suppliers. The reason is said to be that unsold merchandise is piling up on shelves in stores and in warehouses.

This matters substantially if the reports are not an exaggeration. After all, the holiday season buildup generally starts in October and increases through November. It is this holiday season that matters the most of all quarters to retailers.

Bloomberg has also now just reported that it has obtained an email from September 17 showing that Walmart is cutting supplier orders for this quarter and for the coming quarter.

CNBC has somewhat refuted this report, although it sounds like they blasted the report if you only read the headline. CNBC’s headline was “Wal-Mart: Slashed orders report ‘completely false'” but that is not exactly what the article says. Here is what the CNBC report actually says:

In response to the report, Wal-Mart spokesperson David Tovar told CNBC that the report is “misleading,” adding that the company has hundreds of inventory categories and that it is constantly managing inventory levels.

Walmart shares were down 2.2% at $74.10 around 1:40 p.m. EST on Wednesday. It should be no surprise that this is not being deemed just as a Walmart problem. In fact, the SPDR S&P Retail (NYSEMKT: XRT) is now down 0.6% at $81.75 after a sharp drop from positive to negative took place in the last half hour.

The one holdout with gains is actually Sears Holdings Corp. (NASDAQ: SHLD), which was last seen up (ironically) by 1.4% at $58.69. The gain of Sears is on the development and redevelopment reports, and after Sears Canada’s CEO resigned. Drops seen elsewhere among major retail were as follows:

• Target Corp. (NYSE: TGT) was down 1% ay $63.22 against a 52-week range of $58.01 to $73.50;
• Costco Wholesale Corp. (NASDAQ: COST) was down 0.9% at $115.26 against a 52-week range of $93.51 to $120.20.