<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=192888919167017&amp;ev=PageView&amp;noscript=1">
Thursday, March 28, 2024
March 28, 2024

Linkedin Pinterest

Wal-Mart sales perk up ahead of holiday season

The Columbian
Published: November 13, 2014, 12:00am

NEW YORK — Wal-Mart Stores Inc. eked out a rare gain in an important sales measurement during the third quarter as it reported profits that beat Wall Street expectations Thursday.

But the world’s largest retailer issued a fourth-quarter profit outlook that missed estimates because of expected fierce holiday discounting. The quarter also marked two full years of traffic declines at U.S. Wal-Mart stores.

Macy’s, J.C. Penney and Kohl’s all reported results this week that show shoppers remain cautious heading into the holiday shopping season.

Wal-Mart itself is a barometer of consumer spending, and its challenges reflect the struggles of its low-income shoppers, who are being squeezed by stagnant wages and reduced government food stamps. But Wal-Mart sees potential help: Lower gas prices that could put more money into shoppers’ pockets.

To win its share of its holiday dollars, Wal-Mart announced an aggressive plan that includes free shipping on the top 100 items and price cuts on 20,000 items. Starting Friday, Wal-Mart will match online prices such as Amazon’s in its stores. Managers of half of its stores were already doing that, but now it’s an official policy.

“Being the price leader is an ongoing priority for us and a commitment to our business,” said Doug McMillon, who took over as CEO in February. “And with every year, that is even more important during the holiday season.”

He added that while he’s encouraged by the sales increase at its Wal-Mart stores, he’s still not satisfied with the performance.

Wal-Mart reported earnings of $3.71 billion, or $1.15 per share, for the three months that ended Oct. 31.

The company, which is based in Bentonville, Ark., posted revenue of $119 billion in the period, beating Wall Street forecasts. Analysts expected $118.35 billion, according to Zacks.

Wal-Mart’s U.S. discount division posted a 0.5 percent increase in revenue at stores open at least a year. That was the first increase in seven quarters.

Its smaller Neighborhood Markets, which cater to shoppers looking for more convenience and offer groceries, fresh produce and beauty items, had a 5.5 percent increase in revenue at stores open at least a year.

During a call with reporters on Thursday, Wal-Mart Chief Financial Officer Charles Holley said the retailer is already seeing some benefit from lower gas prices, which are translating into improved customer traffic in stores.

“We all know it can help the average consumer,” he said.

The average gasoline price in the U.S. has fallen for 48 straight days, according to AAA. Drivers are now paying $2.92 per gallon, on average.

Ken Perkins, president of RetailMetrics LLC, believes it will take until December for Wal-Mart and other stores to really benefit from the money saved.

It remains to be seen how much.

Macy’s Chief Financial Officer Karen Hoguet told investors Wednesday there’s a correlation between lower fuel price and spending, but she doesn’t believe that the department store chain will benefit as much since shoppers are shifting more of their purchases to areas like home improvement, health care and gadgets.

“I think customers are choosing to spend their disposable dollars in different ways, and that’s part of the reason why we’re not more optimistic about the lower gas prices,” she said.

Loading...