Wal-Mart reports sales rise for April
Posted on Friday, May 9, 2008
Sales at Wal-Mart Stores Inc. rose in April more than Wall Street analysts expected, the company reported Thursday, citing strength in flat-panel TVs, video games, grocery items and over-the-counter medicines.
Dillard’s Inc. said its sales in stores open at least a year slid 4 percent.
Sales at 35 chain stores tracked by the International Council of Shopping Centers rose 3. 6 percent, the retail trade group said, boosted by an extra shopping day compared with the same period a year ago. It was the largest monthly jump in more than a year, the group said, but followed the worst March sales performance in 13 years.
Wal-Mart’s same-store sales rose 3. 2 percent, more than the average 2. 1 percent anticipated by 10 retail analysts that Thomson Financial surveyed. Sales were up 2. 6 percent in Wal-Mart’s U. S. stores division and 6. 6 percent in its Sam’s Club wholesale division, not counting gasoline sales.
Sales in Wal-Mart’s international division were up 18. 4 percent. The company does not report comparable-store sales for its international operations.
Wal-Mart’s stock closed Thursday at $ 57. 16 a share, up 33 cents or 0. 58 percent, on the New York Stock Exchange. Over the past year, it has traded as high as $ 59. 09 and as low as $ 42. 09.
Despite the strong showing, Eduardo Castro-Wright, president and chief executive officer of the U. S. stores division, said the company sees evidence of economic pain among its customers.
“The economy continues to get tougher, and the paycheck cycle is more pronounced for customers than in past months,” he said in a statement. “As money gets tighter for them toward the end of the month, sales drop more than we have seen in the past.” A year ago, the Bentonvillebased retailer reported comparable-store sales down 3. 5 percent in April, the largest monthly drop since the company began reporting the figure in 1979. Same-store sales are a key measure of retailers’ performance because they exclude the impact of recently opened or closed stores.
May sales are likely to be flat to up 2 percent, Tom Schoewe, Wal-Mart’s executive vice president and chief financial officer, said in the company’s statement. Rival discounter Target Corp. reported same-store sales up 3. 1 percent, below the average 4. 5 percent predicted by 11 analysts in Thomson’s survey. Last April, Target’s same-store sales fell 6. 1 percent from the previous year. Costco Wholesale Corp., a Sam’s Club rival, reported samestore sales up 5 percent, excluding gasoline sales. Eleven analysts surveyed expected an average 6. 1 percent gain.
‘SOLID PERFORMANCE’ “Wal-Mart had what has to be considered a very good month,” said Ken Perkins, president of Retail Metrics LLC, a research company based in Swampscott, Mass.
“That was a very solid performance on their part,” he said.
However, he said, the overall strong performance by retailers in April likely won’t be maintained with gasoline and food prices at record levels, tight credit conditions, and four straight months of U. S. job losses.
Tax rebate checks now headed to most U. S. households, which Congress approved as an economic stimulus plan, likely will benefit Wal-Mart in May and June, Perkins said. Most of the checks are $ 600 for individuals, $ 1, 200 for couples.
Patricia Edwards, a fund manager in Seattle for Wentworth, Hauser & Violich, said shoppers are looking to save money as economic conditions continue to deteriorate.
“They are gravitating to the warehouse clubs; they are gravitating to the discount stores like Wal-Mart,” she said.
Wal-Mart’s decision last year to scale back its U. S. expansion put the company ahead of many retailers in focusing on return on invested capital, Edwards said.
“It puts them in a better position going forward,” she said.
Wal-Mart will report its firstquarter earnings Tuesday for the period that ended April 30. In Thursday’s report, the company said it expects net sales to be about $ 94 billion for the quarter.
Net sales for the same period a year ago were $ 85. 4 billion.
DILLARD’S CHALLENGED For April 2007, Little Rockbased Dillard’s reported that same-store sales fell 14 percent. “They had a very low [comparable-sales report ] from the prior period and still were not able to beat it, and I think that’s a reflection of the fundamental challenges still facing the business,” said Pete Hastings, a retail bonds analyst for Morgan Keegan & Co. Inc. in Memphis. Dillard’s has focused on raising its prices recently, he said, and the company is doing so at a time when the country has entered an economic slowdown — a “consumer-led” slowdown at that.
Analysts expected Dillard’s sales to rise 0. 2 percent, Thomson Financial said.
Shares of Dillard’s closed Thursday at $ 19, down $ 1. 13, or 5. 61 percent, in trading on the New York Stock Exchange. The company’s stock has traded as high as $ 40. 56 and as low as $ 14. 19 in the past year.
Dillard’s total sales decreased 3 percent to $ 476. 8 million from $ 490. 4 million for the year-earlier period.
Sales of home and furniture were below the company’s average performance for April.
The retailer’s eastern and western region stores performed below the company average, and sales in the central region were above. Information for this article was contributed by Toby Manthey of the Arkansas Democrat-Gazette.
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