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WRAPUP 1-Wal-Mart leads better sales for US discount retailers
September 4, 2008 / 1:17 PM / in 9 years

WRAPUP 1-Wal-Mart leads better sales for US discount retailers

* Wal-Mart same-store sales better than expected

* Luxury sector shows signs of weakness

* Wal-Mart shares up in pre-market trading

By Karen Jacobs

ATLANTA, Sept 4 (Reuters) - U.S. discount retailers, led by Wal-Mart Stores Inc (WMT.N), posted stronger-than-expected August sales on Thursday as shoppers sought last-minute deals on back-to-school items and other products.

The sales trends also benefited some specialty apparel retailers, like Gap Inc (GPS.N), which managed to top expectations in a weak U.S. economy. Stores catering to the luxury market fared worse during the month.

“Clearly these retailers know that that’s (back to school) their big opportunity,” said Sarah Henry, an analyst with MFC Global Investment Management. “They are being really judicious about what they are presenting.”

Wal-Mart posted a 3 percent rise in same-store sales, beating analysts’ forecast of 1.6 percent, according to Thomson Reuters Estimates.

The world’s biggest retailer cited strong sales of groceries, medicines and other household goods, and gave an optimistic forecast for September, helped by back-to-school sales.

“For Wal-Mart, the value message is really timely and is resonating,” Henry said.

Wal-Mart shares rose to $60.05 in pre-market trading from Wednesday’s close of $59.79.

Wal-Mart said shoppers were waiting until the end of the back-to-school period to make their purchases, a trend that was accelerated as more schools opened later in the year.

Among other retailers known for lower prices, Family Dollar Stores FDO.N posted a 3.6 percent rise in same-store sales, compared with expectations for a 3 percent increase. BJ’s Wholesale Club Inc BJ.N same-store sales rose 15.4 percent, above forecasts for a 14.1 pct rise.


The luxury sector showed more signs of weakness, as Saks SKS.N and Nordstrom (JWN.N) both posted worse-than-expected sales.

Nordstrom sales fell 7.9 percent, worse than the 7.1 percent fall analysts expected, while Saks had a 5.9 percent fall, compared with forecasts for a 4.7 percent dip.

“I would guess that they are not willing to sacrifice margin as much,” Henry said. “That segment is under pressure right now and both of those companies are more exposed” to financial market stress.

Among specialty retailers, Limited Brands LTD.N said same-store sales fell 7 percent on weaker results at its Victoria’s Secret and Bath & Body Works stores.

Gap same-store sales fell 8 percent, better than a Wall Street forecast for a 9.7 percent decline.

Kohl’s Corp (KSS.N), which reported on Wednesday, posted a 5.8 percent decline for the month compared with expectations for a 7.6 percent decline. (Additional reporting by Martinne Geller and Aarthi Sivaraman in New York and Ben Klayman in Chicago, editing by Dave Zimmerman)

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