Analysts expect strong retail-sales reports
Wal-Mart results seen as exception
NEW YORK -- Wal-Mart Stores Inc.'s disappointing performance in October is expected to be the big exception to what is otherwise expected to be a bright month for the retail industry.
On Saturday, the world's largest retailer -- whose sales have been dragged down by store remodeling efforts and a failed upscale apparel strategy -- estimated that same-store sales in October will be up a meager 0.5 percent, the discounter's smallest sales gain since December 2000, when it recorded a 0.3 percent increase, according to Thomson First Call.
Same-store sales, or sales at stores opened at least a year, are considered the best indicator of a retailer's health.
Wal-Mart's shares fell $1.20, or 2.37 percent, to close at $49.53 yesterday on the New York Stock Exchange.
Excluding Wal-Mart, the nation's retailers should post a 4.9 percent gain in same-store sales when they report final figures Thursday. Among the big winners will be department stores, particularly Federated Department Stores Inc. and J.C. Penney Co., helped by industry consolidation and improved fashions, according to Thomson First Call. Teen retailers should also do well, according to analysts.
Discount rival Target Corp. is expected to post a healthy 4.1 percent same-store sales gain for the month, according to Thomson First Call.
"This is a reflection of Wal-Mart itself, not on the industry," said Jharonne Martis, a retail analyst at Thomson Financial.
During last week's meeting with investors, Lee Scott, chief executive of Wal-Mart, blamed the October weakness on remodeling projects at many stores that disrupted business, overloading the store with too many trendy women's apparel items like skinny jeans, and the fact that shoppers who stayed close to home when gas prices were high were still avoiding longer trips to a Wal-Mart now that prices have eased.
Eduardo Castro-Wright, president and chief executive of Wal-Mart's U S store division, said he's confident that declining gasoline prices will soon lift sales.
Meanwhile, plenty of other retailers saw their sales lifted by a variety of factors in addition to falling gasoline prices. Cool temperatures have boosted sales of cold weather items like boots and leggings, while a steady job market and rising consumer confidence have kept shoppers in a mood to spend.
The big question mark is how the slowdown in the housing market will affect consumer spending.
"The housing market is an issue longer term, but it doesn't seem to be an issue for the holiday season," Ken Perkins, president of RetailMetrics LLC, a research firm in Swampscott, Mass.
