Wal-Mart's customers buying more discretionary items

CHICAGO (Reuters) - Wal-Mart Stores Inc's WMT.N U.S. customers are spending more on discretionary items as payroll taxes come down and gasoline prices fall, the head of the discounter's U.S. supercenters said on Wednesday.

A customer shops at a Wal-Mart Supercenter in Rogers, Arkansas, June 5, 2008. REUTERS/Jessica Rinaldi

The world’s largest retailer is seeing customers treat themselves to items such as sporting goods and bedding, using the money they have now that those costs have come down, Walmart U.S. CEO Eduardo Castro-Wright said.

Walmart U.S. also had a strong Easter, an important season for the U.S. chain, Castro-Wright said at a Barclays conference.

The recent economic stimulus package included lower withholding taxes for many Americans. At the same time, gasoline prices are more than 30 percent lower this year than last year, he said.

Wal-Mart has attracted more customers in the recession as people look to save money on everyday items such as food and diapers.

Still, food is not the fastest growing category at Walmart stores in the United States.

“Our best performing categories right now are things like sporting goods, bedding, towels,” Castro-Wright said.

In February, 17 percent of traffic growth at Walmart came from new households and the majority of those households have annual income of more than $50,000, Castro-Wright said.

Those new customers are spending more than the average Walmart shopper, who typically has a lower annual income.

“The average ticket for those customers is 40 percent higher than the rest of the chain,” he said.

Still, Walmart continues to see an impact from the paycheck cycle, the phenomenon where sales rise at the beginning of the month when customers have gotten their paycheck or government checks.

That trend is seen in products such as diapers, where consumers will buy larger “value packs” at the beginning of the month, then switch to smaller packs at the end of the month. While the larger packages cost less per diaper, the smaller packages cost less overall.

Walmart saw a 7 percent increase in sales in Easter-related categories at stores open at least a year, Castro-Wright said. The shift in Easter to April this year from March last year hurt March same-store sales, Castro-Wright noted.

Wal-Mart Stores posted a lower-than-expected 1.4 percent rise in March sales at U.S. stores open at least a year, hitting its stock. Heading into Wednesday, the company’s shares were down almost 8 percent since those sales were reported on April 9.

On Wednesday, Wal-Mart shares rose $1.88, or 3.9 percent, to $50.35 in afternoon trading on the New York Stock Exchange.

Wal-Mart Stores plans to release April sales data on May 7.

Reporting by Brad Dorfman; Editing by Andre Grenon