Advertisement
YOU ARE HERE: LAT HomeCollections

Wal-Mart Posts Modest Sales Gain

September revenue is rising 2% to 4% amid high gas prices and job worries, the retailer said.

September 07, 2004|From Bloomberg News

Wal-Mart Stores Inc., the world's largest retailer, said September sales so far are rising 2% to 4% as consumers scaled back their spending last week amid high gas prices and a sluggish job market.

The discounter had forecast a gain of as much as 4% from a year earlier. Bentonville, Ark.-based Wal-Mart updated results at U.S. stores open at least a year through Friday in a recorded message.

The report indicates tepid consumer spending two months before the U.S. presidential election. Shoppers, who curbed spending in August amid higher gas prices and sluggish wage growth, bought more food and health and beauty products last week, the retailer said.

"Wal-Mart is reporting comparable-store sales gains below historical trends," said Richard D. Hastings, retail analyst with Bernard Sands in New York. "The effect of higher gas prices, a challenging job market, very weak wage growth and consumer-price inflation for middle- and lower-income households has clearly hurt Wal-Mart sales growth. Wal-Mart is a good barometer for middle-income households."

Wal-Mart sales represent about 9% of U.S. retail spending, and economists and retail analysts including Hastings say they represent one of the most timely gauges of current consumer spending.

U.S. employers added a net 144,000 workers to payrolls in August, the most since May and the first acceleration in five months. The unemployment rate fell to 5.4%.

The sales pickup in September comes after Wal-Mart posted a 0.5% gain last month, the smallest monthly increase in four years. Shoppers trimmed purchases at Wal-Mart in August as the average wage for about 80% of nonfarm workers, adjusted for inflation, fell in the last three months, according to the U.S. Bureau of Labor Statistics.

Though gas cost 16% more in August than a year earlier, prices are down from records in late May as higher gasoline imports and domestic refinery production boosted U.S. fuel reserves to normal. "The combination of the lower oil and gas prices along with the job growth would seem to set up a more favorable tilt toward consumer spending in September," said Don Gher, who helps manage about $550 million at Bellevue, Wash.-based Coldstream Capital Management, including about 79,000 Wal-Mart shares.

June sales at Wal-Mart climbed 2.2% and July sales rose 3.2%; the average from June through August was 2%. Monthly sales increased an average of 5.8% from January through May.

"We continue to believe that soft August sales reflect a continuing trend of disappointing sales in general merchandise masked by strong sales of food and consumables," Prudential analyst Wayne Hood, who is based in Atlanta, wrote in a research report last week.

Advertisement
Los Angeles Times Articles
|
|
|