- The Washington Times - Monday, November 29, 2004

From combined dispatches

BENTONVILLE, Ark. — Wal-Mart Stores Inc.’s share price tumbled nearly 4 percent yesterday after the world’s largest retailer lowered its November sales forecast over the weekend.

Wal-Mart had said Saturday it expected its sales at stores open at least a year to be up only 0.7 percent in November, rather than its earlier projection of 2 percent to 4 percent growth.

Wal-Mart shares fell $2.17, or 3.9 percent, to close at $53.15 on the New York Stock Exchange.

Retail analyst Kurt Barnard and other analysts said Wal-Mart didn’t offer the deep discounts it did in past years as the holiday shopping season began Friday.

“I think that Wal-Mart simply decided its normal range of pricing is such that it is definitely considered low by any normal standard,” said Mr. Barnard, president of Barnard’s Retail Forecasting in Upper Montclair, N.J.

By sitting out a year of big-sale promotions, Wal-Mart may have been trying to determine whether it can keep its profits up without having to slash prices on already discounted merchandise, he said.

“They’re looking to get a better gross margin,” he said. “They undoubtedly achieved that.”

Low-income shoppers curbed spending amid high energy prices, Deutsche Bank analyst Bill Dreher said. Wal-Mart’s sales of nonfood items such as clothing may have fallen as results at rival Target Corp. increased, he said.

“We’re really starting to see Wal-Mart having a tough time and Target really accelerate,” Mr. Dreher said in a conference call.

Wal-Mart, which also owns the Sam’s Club warehouse chain, earlier in the month said it would offer “more balanced” promotions because shoppers are delaying purchases until closer to the holiday. The number of shoppers declined toward the end of last week, the retailer said.

Sales may have declined at Wal-Mart’s discount stores while rising at Sam’s Club. That would be the first decline at the discount chain in at least 10 years, Sanford C. Bernstein analyst Emme Kozloff wrote in a report.

Sales of groceries may have helped keep results positive for the month, Mr. Dreher said.

Mr. Barnard noted that Wal-Mart’s downward sales forecast did not necessarily indicate the company will make less money.

“They never even mentioned the word profit,” he said.

Wal-Mart, based in Bentonville, said it had no comment beyond its Saturday sales release.

The new projection was based on four weeks’ worth of sales, from Oct. 30 through Friday, the company said on its Web site. “Sales fell below plan this past week, which impacted the results of our November forecast,” according to the statement. “Keep in mind that this past week was the largest week of the reporting period.”

U.S. retail credit-card transactions rose more than 6 percent in the two days after Thanksgiving, according to reports from Visa International Inc. and MasterCard International Inc., the top two card companies. Retail sales rose 11 percent on Friday, the day after Thanksgiving, from a year earlier, according to ShopperTrak, which estimates revenue based on customer traffic at close to 30,000 stores.

No. 2 U.S. discounter Target, which is based in Minneapolis, said on a recorded call that customers stayed longer and bought more items.

Shoppers who are more confident about spending may be seeking out better brands at retailers such as Costco Wholesale Corp. and Target, said Richard Hastings, retail analyst at consulting firm Bernard Sands LLC.

Wal-Mart, which is opening larger stores that also sell groceries, may be less convenient to customers who want to buy a few gifts quickly, he said.

“While they have been busy knocking some competition out of the ballpark, they have failed to touch their biggest and best competition,” Mr. Hastings, who is based in Charlotte, N.C., wrote in a report. “The simple fact is this: They are not everything to everybody ‘always.’”

Wal-Mart and most other retailers will report final November results Thursday.

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