Sales Still Sluggish: Wal-Mart Short of Expectations
Posted on June 8, 2007 by webteam
Sales Still Sluggish: Wal-Mart Short of Expectations [Ark. Democrat-Gazette]
Wal-Mart Stores Inc. ’s struggles in existing stores continued in May, with sales up 1. 1 percent over 2006 in stores open at least a year, the retailer reported Thursday.
The meager increase was in line with the Bentonville-based company’s expectations.
Little Rock-based Dillard’s Inc. reported same-store sales down 2 percent for May.
In Wal-Mart’s U. S. outlets, the Sam’s Club membership operation recorded a 5. 4 percent increase, excluding fuel, while sales at the company’s supercenters, discount and grocery stores were up 0. 3 percent.
Home and apparel sales remained sluggish, Wal-Mart said in a statement. Those categories have played a significant role in the company’s struggles the past year to increase same-store sales, or stores open at least a year, a key performance indicator watched by investors.
“Wal-Mart U. S. continues to focus on its plan to improve comparable store sales,” Tom Schoewe, executive vice president and chief financial officer, said in a statement.
Wal-Mart’s stock closed Thursday at $ 49. 76, down 99 cents or 1. 95 percent.
Rival Target Corp., with just over a third as many U. S. stores as Wal-Mart, reported samestore sales up 5. 8 percent for the month.
“May was the 44 th of the last 46 months that Target’s comp-store sales exceeded Wal-Mart’s. (It’s starting to look like something of a pattern ),” Edward Weller, retail analyst with ThinkEquity Partners LLC in San Francisco, wrote in a research note.
Target’s stock closed Thursday at $ 62. 53, down $ 1. 57 or 2. 45 percent.
Across the retail industry, same-store sales were up 2. 5 percent in May, following a record 1. 9 percent drop in April, based on 50 retail chains tracked by the International Council of Shopping Centers. Minus Wal-Mart, the world’s largest retailer, sales were up 3. 8 percent in May, according to the council’s report.
Upscale stores did well in May. Saks Inc. reported a 37. 5 percent increase in same-store sales. Saks said the sales figures reflect a shift in its promotional calendar, and June sales figures could suffer.
Wal-Mart announced at last week’s annual shareholder meeting that it would scale back its store expansion plans for this year and future years. The company also expanded its stock repurchase plans by $ 11. 7 billion.
Several retail analysts subsequently upgraded their ratings for Wal-Mart stock, which went on a brief rally earlier this week.
John Lawrence, analyst with Morgan Keegan & Co. Inc. in Memphis, said in a research report Thursday that the company’s renewed focus on existing stores and other initiatives should reinvigorate same-store sales.
“However, given the sluggish housing market and high gas prices, we remain concerned about the declining traffic trend and the turnaround of home and apparel business,” he wrote.
For the 17 weeks ended June 1, U. S. same-store sales were up 0. 8 percent, with Sam’s Club at 4. 9 percent and the remainder of the stores at 0. 1 percent.
Including U. S. stores open less than a year and international operations, Wal-Mart sales for the four weeks ended June 1 totaled $ 28. 3 billion, up 7. 7 percent over a year ago. International sales were up 14. 2 percent.
Wal-Mart projected June same-store sales could be flat or rise as much as 2 percent.
Dillard’s Inc. continued a 12-month trend of almost continuous weak sales.
May sales in stores open at least a year fell 2 percent compared with the same period last year, the department store chain reported. Analysts expected same-store sales to drop 1. 2 percent, according to Thomson Financial.
The 2 percent fall, however, was better than the 14 percent dive that Dillard’s reported for April at stores open more than a year.
For May, total sales fell 1 percent to $ 527. 9 million from $ 533. 5 million a year earlier.
Dillard’s reports total sales in more detail. Those sales in the retailer’s eastern region slid more than sales companywide, while sales in the central and western region were about even with the trend.
Cosmetics sales fell more than the overall trend, Dillard’s said, while shoes performed better than the overall sales trend.
For most of the year, or the 17 weeks that ended June 2, Dillard’s total sales are down 3 percent compared with the comparable 2006 period, and same-store sales are down 4 percent.
Dillard’s stock closed Thursday at $ 34. 71 a share, down 35 cents or 1 percent. It reached a high of $ 40. 56 in the past several weeks, which was reached on rumors of a buyout.
Other retailers reporting a drop in same-store sales included J. C. Penney and Macy’s Inc. Information for this article was contributed by Toby Manthey of the Arkansas Democrat-Gazette.
