Wal-Mart Aims for Sales Recovery This Fall

07 September 2004

After achieving its worst monthly sales increase for four years in August, the world's largest retailer, Wal-Mart, is optimistic that September sales will show signs of recovery.

It expects September growth to be in line with its 2%-4% forecast for the third quarter, although this was recently scaled down from the previously predicted 3%-5%.

August's performance, at 0.5%, narrowly beat the downgraded forecast of 0.2% [WAMN: 25-Aug-04] and was attributed to the effects of Hurricane Charley and torpid back-to-school sales.

Often regarded as an indicator of middle-American spending habits, Wal-Mart's performance set the trend for the month among most other mid-price department stores and discounters as moderate-income shoppers reined in spending on backpacks and pencils, forced to pay out more for basics like gas and groceries.

The retail giant now claims that pre-school purchases 'looked good' and that sales were lifted by emergency preparations before the latest storm to hit the US, Hurricane Frances. It also predicts spending on the post-storm clean-up operation will boost growth.

Analysts such as Richard Hastings from credit ratings firm Bernard Sands are more reticent: "Their same-store sales continue to trend below historic levels."

He added that tough competition from other retailers was taking its toll on Wal-Mart's sales and that much of its growth was attributable to the turnaround at its Sam's Club unit.

Data sourced from: Financial Times; additional content by WARC staff