Wal-Mart Blames Weather For Dampened June Comps

After warning on June 28 that same-store sales for the month weren’t going to meet its 4 percent to 6 percent projection, on July 8 Wal-Mart Stores Inc. reported a disappointing 2.2 percent increase in June comps, barely within the Bentonville company’s revised guidance of 2 percent to 4 percent.

KeyBanc Capital Markets/McDonald downgraded shares of Wal-Mart a day later from “buy” to “hold.”

Same-store sales, also known as comparable-store sales, or comps, is a key industry benchmark for year-over-year performance because it excludes sales figures from stores opened within the last year.

In late June, Wal-Mart said cool weather across much of the United States put a damper on sales of summer items like air conditioners and swimming pool supplies. The world’s largest company by revenue also cited weak Father’s Day sales as a contributing factor.

Wal-Mart’s sales have been lagging behind its competitors for almost a year now.

Wal-Mart’s June reporting period includes the five weeks ended July 2. In early June, Wal-Mart said the movement of the 4th of July holiday out of its June sales reporting period and into July could impact sales by about 1 percent. But Wal-Mart said the dip would be at least partially offset by the positive impact of moving Memorial Day from the May reporting period into June.

Wal-Mart reported net sales of $26.972 billion for June, an increase of 9.3 percent over the $24.6 billion in the same five-week period in the prior year. Sales for the first 22 weeks of the company’s fiscal year were $114.46 billion, an increase of 12.3 percent over $101.93 billion in the similar period in the prior year.

The Wal-Mart stores division had sales of $18.11 billion for June, up 8.3 percent over sales of $16.73 billion in the comparable period of 2003. Same-store sales for the Wal-Mart stores division were a lackluster 1.3 percent, compared to 2.4 percent for June 2003 and 6.4 percent for its Sam’s Club division, which has been posting steady sales increases for months. (Sam’s Club reported comps of 4.1 percent for June 2003.)

Sam’s Club’s June sales were $3.65 billion, up 7.8 percent over sales of $3.38 billion for the same period in the prior year.

June sales for the international division were $5.216 billion, up 14.4 percent over sales of $4.56 billion in the same five-week period in the previous year.