Wal-Mart sees weak sales as holiday season starts
Sat Nov 25, 2006 11:55am ET
CHICAGO (Reuters) - Wal-Mart Stores Inc. predicted a rare decline in monthly sales on Saturday, even as U.S. bargain-hunters jammed stores in search of gifts at the start of the crucial holiday shopping season.
Wal-Mart, the world's biggest retailer, sounded a cautious note for retailers as they began a second day of Thanksgiving weekend sales with deep discounts and early bird specials on items ranging from cashmere sweaters to big-screen plasma televisions.
Wal-Mart estimated that November sales fell 0.1 percent at its U.S. stores open at least a year -- a closely watched retail measure known as same-store sales.
The retailer will provide a final monthly sales report on Thursday, when most other major chain stores report their November figures. This would mark Wal-Mart's first monthly same-store sales decline since April 1996.
Wal-Mart had expected same-store sales to be flat compared with the same period last year, which many Wall Street analysts had viewed as disappointing. Wal-Mart's four-week November sales period ended on Friday.
"We would frankly have expected better," Merrill Lynch retail analyst Virginia Genereux wrote in a note to clients dated Friday, pointing out that Wal-Mart had slashed prices on popular toys, electronics and other gift items to lure customers. The retailer's widely publicized $4 generic drug program should have drawn more shoppers, too.
Investors are watching holiday sales particularly closely this year to gauge how consumers are coping with a slowdown in the housing market that has already hurt home improvement retailers and furniture stores.
Consumer spending accounts for some two-thirds of U.S. economic activity, and the November-December holiday season makes up anywhere from 20 percent to 40 percent of retailers' annual sales.
It'll be interesting to see figures from retailers in toto.
WMT is not necessarily a barometer. Frankly just by virtue of WMT's sales being almost flat means to me that early holiday business is brisk.