Wal-Mart steamrolls its way through the recession
Indeed, the world's largest retailer appears to be emerging from the recession stronger than ever as middle-class consumers snap up bargains at its stores. That certainly was the case in February, when the Bentonville, Arkansas-based company reported a five percent gain in U.S. comparable same-store sales. That was well above analysts' estimates.
The average ticket also increased. Though overall international sales plunged, Wal-Mart showed strong results in key markets such as Canada, Mexico and Japan. Wal-Mart, whose shares have outperformed the broader market during the economic downturn, is expecting sales to rise one to three percent in the quarter ending in May. Consumers flocked to stores more in February because their discretionary income rose thanks to declining gas prices, according to Vice Chairman Eduardo Castro-Wright.
Other chains were not so lucky.
BJ's Wholesale Club Inc. (BJ) reported a disappointing 0.6 percent sales gain, while Costco Wholesale Corp. (COST) posted a worst-than-expected decline of three percent, according to Reuters.
For mall-based retailers, the picture was even worse.
Children's Place Retail Stores Inc. (PLCE), a children's apparel retailer, said February sales were flat. Limited Brands Inc. (LTD) posted a decline of seven percent. Analysts expected the parent company of Victoria's Secret to show a drop of 7.1 percent. Comparable same store sales at trendy clothing retailer American Apparel Inc. (APP) decreased nine percent.
Fashion retailer Liz Claiborne Inc. (LIZ) warned today that it would post a "meaningful loss" in the current quarter and that expects no improvement in retail sales. Shares of Gymboree Corp. (GYMB) tanked yesterday after the children's clothing retailer reported a bleak outlook even though it reported a strong quarter.
Retailers had a rough 2008 and will have a rougher 2009. The National Retail Federation is forecasting a 0.5 percent drop in revenue, the first decline in more than three decades. Thousands of stores are expected to shutter their doors because of the economy.
It's a good thing most Wal-Marts open early.