UPDATE 3-Wal-Mart posts strong Feb sales, raises dividend

Thu Mar 5, 2009 12:37pm EST

Related Topics

 * Wal-Mart same-store sales up 5.1 pct vs view up 2.4 pct
 * Wal-Mart raises annual dividend by 15 pct
 * Target same-store down 4.1 pct vs view down 4.8 pct
 * Family Dollar Q2 same-store sales beat estimates
 * Wal-Mart, Family Dollar shrs rise; Target falls
 (Adds Family Dollar, analyst comment; updates stock price)
 By Nicole Maestri
 NEW YORK, March 5 (Reuters) - Wal-Mart Stores Inc (WMT.N)
reported a higher-than-expected rise in February same-store
sales and said it was raising its dividend due to the strength
of its business, sending its shares 3 percent higher.
 The world's largest retailer gave an overall boost to
retail sales in February and proved it is pulling further ahead
of rivals like Target Corp (TGT.N). [ID:nN05303321]
 Target posted a same-store sales decline in February, while
discounter Family Dollar Stores Inc (FDO.N) said second-quarter
same-store sales rose far higher than expected.
 Shares of Target fell 3.3 percent, while Family Dollar
surged 11 percent.
 Wal-Mart also increased its annual dividend 15 percent to
$1.09 per share from 95 cents per share in its most recently
completed fiscal year.
 "Our free cash flow remains strong enough to fund Wal-Mart's
growth around the world, make strategic acquisitions and fund
returns to shareholders through dividends and share
repurchases," CEO Mike Duke said in a statement.
 Wal-Mart said its February sales at U.S. stores open at
least a year, or same-store sales, rose 5.1 percent as lower
gasoline prices eased some household budgets.
 The results far surpassed analysts' average estimate for a
2.4 percent increase, and Barclays Capital analyst Bob Drbul
said it is clear that Wal-Mart is gaining market share.
 "These guys are doing a great job at their agenda, which is
widening the moat" between themselves and competitors, he said.
"The dividend increase is simply gravy on top of today's
 Wal-Mart said lower gasoline prices "significantly boosted
household disposable income in February," letting consumers make
more trips to stores and spend more on nonessential goods like
 The average price for a gallon of regular gasoline was
$1.91 at the end of February, compared with $3.13 in February a
year ago, according to the Energy Information Administration.
 Wal-Mart hinted last year that lower gas prices were
working in its favor, saying it saw an increase in traffic to
rural and urban stores after prices dropped in October.
 Drbul said declining gas prices help discount retailers
because they cater to lower-income shoppers, who are most
sensitive to rising energy costs.
 Family Dollar Stores said second-quarter same-store sales
rose 6.4 percent, above estimates for a 3.6 percent gain, as
consumers snapped up consumable items like laundry detergent or
 Family Dollar, which sells most of its merchandise for
below $10, now expects second-quarter earnings of 59 cents to
61 cents per share. In January, it forecast second-quarter
earnings of 48 cents to 52 cents per share.
 The gas price drop did not give Target the same benefit.
Its February same-store sales fell 4.1 percent, although that
was better than the 4.8 percent drop analysts expected.
 Target, which tends to attract a higher-income shopper,
said sales of food and healthcare items were strongest, while
same-store sales in clothes and its home business fell.
 Target said it is expecting a wide range of outcomes for
March and April sales, with its estimates centered around
expectations that same-store sales for the two months combined
will fall in the mid single digits.
 For March, it is forecasting same-store sales to decline in
the high single digits, with April same-store sales to be
roughly flat to last year.
 Wal-Mart said that for February same-store sales rose 5
percent at its namesake U.S. discount stores, where traffic was
positive for the fifth month in a row.
 Same-store sales rose 5.9 percent at its Sam's Club
warehouse division, as customers purchased fresh food, meat and
pet supplies. Demand was weak for furniture, jewelry and other
big-ticket, or expensive, items, it said.
 Last month, Wal-Mart said that it would no longer provide
monthly sales forecasts. Instead, it forecast same-store sales
for the period from Jan. 31 through May 1 to increase between 1
percent and 3 percent.
 (Editing by Lisa Von Ahn, Dave Zimmerman and Matthew Lewis)