This increase in retail sales "led by groceries" to me reflects food inflation. I just don't think WMT consumers have suddenly discovered WFMI prices and choices, or have increased appetites.
Wal-Mart Says July Sales Rose 4.4%, Led by Grocery Buying
Aug. 4 (Bloomberg) -- Wal-Mart Stores Inc., the world's largest retailer, said July sales rose 4.4 percent as grocery buying and fewer clearance sales helped the gain.
August sales at its U.S. stores open at least a year will climb 3 percent to 5 percent, Bentonville, Arkansas-based Wal- Mart said today in a statement sent on PR Newswire.
Sales of food outpaced other merchandise for three of July's four weeks at Wal-Mart, the nation's biggest grocer. Strong June sales of warm-weather goods and record heat in the Midwest and West last month meant the retailer didn't need to keep trimming what it calls ``always low prices'' to clear inventory.
With the heat, ``there should be no excuses about moving volumes in the summer categories,'' said Larry Jones, a managing director at NCM Capital Management in Durham, North Carolina, with $2.4 billion in assets including Wal-Mart shares.
Wal-Mart had predicted a 3 percent to 5 percent July sales gain after June's increase was 4.5 percent, the largest in 13 months. U.S. retailers' sales rose at least 4 percent in July from a year earlier, according to an estimate by the International Council of Shopping Centers, a New York-based trade group that tracks sales at about 75 chains.
Sales rose 4.2 percent at Wal-Mart's main chain of discount stores and supercenters, which sell groceries as well as clothes, home furnishings, toys and other items. Sales at the company's Sam's Club warehouse chain rose 5.1 percent.
Shares of Wal-Mart fell 12 cents yesterday to $49.68 in New York Stock Exchange composite trading. They've dropped 5.9 percent this year while shares of Minneapolis-based Target Corp., the second-largest U.S. discounter, have gained 11 percent.
Record Heat
Hot weather prompted shoppers to pay full price for summer items in a month normally marked by clearance sales, investors including Keri Spanbauer said.
``Certainly the hot weather should be helping them clear through their summer merchandise,'' bolstering profit margins, said Spanbauer, an analyst with Appleton, Wisconsin-based Thrivent Investment Management, which has more than $60 billion in assets including Wal-Mart shares.
Last month was likely the hottest July since 1895, according to Wayne, Pennsylvania-based Planalytics Inc., which advises companies on weather trends. Weather-driven retail demand was 14 percent higher last month than during the cooler-than- normal July 2004, the company said in a report.
``There is something to be said for free air conditioning,'' said Patricia Edwards, who helps manage $5.7 billion in assets including 69,000 Wal-Mart shares. ``Given what I've seen, Wal- Mart needed the heat of the century to get some of that stuff sold.''
Much of the retailer's summer clothing wasn't fashionable, she said.
Gasoline
Wal-Mart Chief Executive H. Lee Scott has been trying to strengthen sales of general merchandise and widen profit margins by adding items such as plusher towels and more finely woven sheets to attract shoppers with larger incomes.
Higher gasoline prices, often cited as capping spending by lower-income shoppers, may help Wal-Mart by prompting consumers to buy more at one location, said Donald Gher, chief investment officer at Bellevue, Washington-based Coldstream Capital Management, which manages $650 million including Wal-Mart shares.
That might help account for the company's higher sales ``despite little change in traffic,'' Gher said.
Gasoline prices are expected to be about 19 percent higher in the second half of the year, costing the average family an extra $31 per month, Sanford Bernstein analyst Emme Kozloff wrote in a report. A 19 percent to 25 percent price rise would shave 1.3 percent to 1.7 percent per month off Wal-Mart's comparable- sales gains, said Kozloff, who's based in New York rates the company's shares ``market perform.''
Confidence
U.S. shoppers are feeling more tentative about spending, Kozloff wrote in another report. ``While the perception of current conditions is still near a 20-year high, consumers view the future with more skepticism than before,'' she said, citing a July 26 report by the New York-based Conference Board.
The most dramatic decline in confidence, a 15.6 percent drop, came from the lowest income group, perhaps because of higher gasoline prices, Kozloff said. |
