Grinch May Steal Retail Christmas

Holiday sales could predict outlook for 2001

Wal-Mart Stores Inc. says sales were below expectations for two recent weeks, but the world’s largest retailer is still doing better than its upscale brethren.

The reason Wal-Mart is weathering the storm better than other retailers is that discount and grocery stores are more recession-proof than other types of retailers, said Asma Usmani, a Wal-Mart analyst with Edward D. Jones & Co. of St. Louis. Wal-Mart sells groceries in its 868 Supercenters, 472 Sam’s Clubs and 15 Neighborhood Markets.

“When the consumer concerns are more cautious, you see them step down in their purchases,” Usmani said. “They may bypass the specialty store and the department store and shop at the discount store.”

Wal-Mart said sales were below projections for the weeks ending Dec. 2 and 9, but the company didn’t provide figures. Same-store sales for December are expected to be at the lower end of the company’s 3 to 5 percent growth plan. Same-store sales — that is, sales in stores open for at least a year — are considered a good barometer of a retailer’s financial health.

Wal-Mart’s same-store sales began to flatten in mid-2000. Same-store sales dropped from a 9.1 percent increase in the first quarter, compared with the first quarter of 1999, to a 5.4 percent gain in the second quarter. At the same time, consumer spending and the nation’s gross domestic product dropped sharply.

“If that were to continue, we’d see some more conservative numbers into next year,” Usmani said. “For retailers in general, it doesn’t seem we’re going to have a very merry Christmas.”

According to the Bloomberg Composite Same-Store Sales Index, Wal-Mart’s same-store sales were up 4.4 percent, to $14.2 billion, in November, compared with the same month a year ago. November is an important month because it contains one of the busiest shopping weeks of the year, the week of Thanksgiving.

Wal-Mart’s net sales for the month were $16.4 billion, an increase of 9.4 percent over the previous year.

The same-store sales increase at Wal-Mart wasn’t shabby, but it’s not what analysts are used to seeing. Wal-Mart’s same-store sales increases ranged from 6.3 to 9.3 percent through the four quarters of 1999.

Discount retailers as a group were up 4.48 percent in same-store sales for November, compared with more modest increases for other types of retailers: 2.36 percent for department stores, 2.08 percent for specialty retailers and 3.11 percent for warehouse clubs.

However, retail sales as a whole dropped for the first time since April — by 0.4 percent, according to the U.S. Department of Commerce.

A 2.2 percent decline in auto sales sent the overall retail number downward. The drop was the sharpest since July 1998.

Without the automotive industry figures, sales would have inched up a mere 0.2 percent over the previous month’s numbers. That’s half of the increase from September to October.

An earlier Thanksgiving and a long weekend before Christmas meant a longer shopping season this year. Retailers hope that may make the Christmas season brighter than it looked in early December.