DOW JONES NEWSWIRES
Retailers are expected to report even worse same-store sales in
January than they have in the past several moribund months, during
which figures hit multidecade lows amid a consistent decline in
consumer spending.
The woes have been highlighted by none other than industry
behemoth Wal-Mart Stores Inc. (WMT), which until December showed it
was benefitting from the slumping sales seen by other retailers as
consumers trade down and do more bargain shopping.
It reported a 2.1% increase in U.S. same-store sales last month,
excluding gasoline sales, with the namesake chain posting a 2.1%
increase and Sam's Club seeing 2.4% growth. The results edged the
high end of Wal-Mart's forecast last month of flat to 2%
growth.
The increase, while not terribly big, is much better than how
retail as a whole has been faring.
While saying its stores "are performing very well," Vice
Chairman Eduardo Castro-Wright noted the just-concluded fiscal
year's same-store-sales growth was triple that of the prior
year.
Wal-Mart also switched from providing monthly sales forecasts to
quarterly ones. For the period started Saturday, the company
anticipates U.S. same-store-sales growth of 1% to 3%.
Wal-Mart shares rose 1.6% premarket to $47.18.
Separate indexes from Thomson Reuters and Retail Metrics are set
to fall for the fourth-straight month in January and hit their
weakest levels this decade. Excluding Wal-Mart, the projected
declines of 2.3% would otherwise be near 6%. Thomson Reuters noted
the year-over-year decline comes despite last January's sales being
weak, which ordinarily would give retailers relatively easy
comparisons to match.
The troubles reflect the continued deterioration of consumer
confidence, which has crashed to record lows of late. That is
proven not just by surveys but the biggest drop for consumer
spending in decades, and even deep discounts that attracted
shoppers as the month began lost their effectiveness as January
progressed.
Sam's Club rival Costco Wholesale Corp. (COST) on Wednesday
warned that earnings this quarter will be "substantially below"
analysts' expectations because of weak non-food sales and slumping
margins, partially due to "aggressive" pricing on core items to
boost sales and increase market share that took place before
Christmas. Numerous companies cut bottom-line expectations last
month when releasing December sales figures because of sales woes
and/or margin pressure from discounting.
Among the other retailers reporting January same-store sales
early Thursday, struggling Limited Brands Inc. (LTD) reported a 9%
drop. The parent of Victoria's Secret and Bath & Body Works
last month projected a mid- to high-teens drop on a percentage
basis for January as it slashed its fiscal fourth-quarter earnings
forecast.
And high-flier Buckle Inc. (BKE) again remained far above its
peers, reporting a 15% increase which was well above analysts'
expectations. The teen-apparel company has posted double-digit
growth in same-store sales for 18 straight months.
-By Kevin Kingsbury, Dow Jones Newswires; 201-938-2136;
kevin.kingsbury@dowjones.com