Wal-Mart sees weak sales as holiday season starts
Wal-Mart sees weak sales as holiday season starts
Sat Nov 25, 2006 11:55am ET
By Emily Kaiser
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.
The National Retail Federation trade group expects holiday sales growth of about 5 percent, which would be a slowdown from last year's surprisingly strong 6.1 percent gain.
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Department store chain J.C. Penney Co. Inc. said its holiday season was off to a good start, with brisk foot traffic and strong demand for categories such as home entertainment, jewelry, children's clothing and housewares.
Famed toy retailer FAO Schwarz kept its stores open on Thanksgiving Day, and reported strong demand for hand-made wooden toys -- some of which sold for $1,200 apiece.
At its New York flagship store, Thanksgiving Day sales were flat, which the company attributed to bad weather, while its Las Vegas store saw a 45 percent sales increase.
"I see people buying better, what I call 'antiquity', presents that are better made, more durable -- things I view as generational presents," Ed Schmults, chief executive, told Reuters in an interview.
A Wal-Mart spokeswoman declined to comment on its Black Friday sales, but said the retailer will provide those details along with its sales report on Thursday.
Wal-Mart began cutting prices as early as October instead of the usual November. The retailer is eager to revive growth after back-to-back months of disappointing sales in September and October, but Saturday's report suggested that the early discounts were not enough to reverse the poor sales trend.
Stores were packed on Friday, the traditional start to the holiday shopping season, and retailers were pushing another round of discounts on Saturday to keep shoppers coming back. The NRF trade group expects some 137 million Americans to go shopping this weekend.
But big crowds don't necessarily mean strong sales.
Michael McNamara, vice president of research and analysis at MasterCard's SpendingPulse, noted that while hot items such as the PlayStation 3 video game system have generated considerable buzz, they are only a tiny portion of retailers' overall sales.
He said rather than focusing on Black Friday crowds, investors should pay close attention to October sales trends, which showed a dramatic slowdown in growth year-over-year heading into the holiday season.
"You're looking at (sales) growth rates that are about half of what they were last year," he said. "The momentum that we have coming in is definitely down several notches."
© Reuters 2006. All Rights Reserved.
Sat Nov 25, 2006 11:55am ET
By Emily Kaiser
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.
The National Retail Federation trade group expects holiday sales growth of about 5 percent, which would be a slowdown from last year's surprisingly strong 6.1 percent gain.
$1,200 HAND-MADE TOYS
Department store chain J.C. Penney Co. Inc. said its holiday season was off to a good start, with brisk foot traffic and strong demand for categories such as home entertainment, jewelry, children's clothing and housewares.
Famed toy retailer FAO Schwarz kept its stores open on Thanksgiving Day, and reported strong demand for hand-made wooden toys -- some of which sold for $1,200 apiece.
At its New York flagship store, Thanksgiving Day sales were flat, which the company attributed to bad weather, while its Las Vegas store saw a 45 percent sales increase.
"I see people buying better, what I call 'antiquity', presents that are better made, more durable -- things I view as generational presents," Ed Schmults, chief executive, told Reuters in an interview.
A Wal-Mart spokeswoman declined to comment on its Black Friday sales, but said the retailer will provide those details along with its sales report on Thursday.
Wal-Mart began cutting prices as early as October instead of the usual November. The retailer is eager to revive growth after back-to-back months of disappointing sales in September and October, but Saturday's report suggested that the early discounts were not enough to reverse the poor sales trend.
Stores were packed on Friday, the traditional start to the holiday shopping season, and retailers were pushing another round of discounts on Saturday to keep shoppers coming back. The NRF trade group expects some 137 million Americans to go shopping this weekend.
But big crowds don't necessarily mean strong sales.
Michael McNamara, vice president of research and analysis at MasterCard's SpendingPulse, noted that while hot items such as the PlayStation 3 video game system have generated considerable buzz, they are only a tiny portion of retailers' overall sales.
He said rather than focusing on Black Friday crowds, investors should pay close attention to October sales trends, which showed a dramatic slowdown in growth year-over-year heading into the holiday season.
"You're looking at (sales) growth rates that are about half of what they were last year," he said. "The momentum that we have coming in is definitely down several notches."
© Reuters 2006. All Rights Reserved.
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