BENTONVILLE – Wal-Mart Stores, Incorporated [NYSE Ticker: WMT] reported sales figures for the four-week periods ending February 27, 2009 and February 29, 2008. The strong results are both the mark of a company that has fought to remake its dowdy image – while embracing its roots as a low-cost retailer.
Wal-Mart is one of the few remaining stalwarts to actually expand business amidst today’s financial carnage and the glowing statistics are not to be mistaken for a grandiose harbinger of U.S. economic vitality.
Net sales at the world’s largest retailer increased from $29.2 billion to $30 billion during the month of February over the last year. The 2.8% increase would have been even more stellar if not for a stronger dollar and currency exchange rates that adversely affected international sales by 20.7%. Overall, Walmart February U.S. net sales surged by 8.1%.
Adjusting for plunging gasoline prices that have slashed fuel revenue, Wal-Mart, Inc. same-store sales have ramped up by 5.1%. The comparable store statistic designates locations that have been open for more than one year and is a critical indicator of retail success.
Again, we would strongly advise against analyzing Walmart reports as a benchmark of the overall economy. Counter intuitively; the findings are attributable to worldwide economic carnage. Per Bentonville management:
“Customers continue to focus on necessities and avoid purchasing discretionary items in home, apparel, and shoes. Customers come to Walmart because they trust our price leadership.”
This does not bode well for retail at-large.
Obviously, the consumer has pulled back, and is content to purchase the most basic of items. Higher end retailers are being crushed, while penny-pinching shoppers that have downgraded to Wal-Mart adversely affect mid-level stores.
Nordstrom released a miserable February report detailing a 15.4% decline in same store sales; and heated, cheap-chic rival Target is feeling the heat with a 4.1% downdraft in comps. Although the world economy is currently under siege from a wretched real estate bust, credit debacle, and stock market rout – we must speculate that a New Era has indeed, dawned.
Frivolous, grandstanding waste is not cool.
Even P. Diddy is foregoing The Bling and abandoning his private jet.
Walmart February Same-Store Sales Sources:
Target Corporation, Target February Same Store Sales, http://investors.target.com
Nordstrom, Inc., Nordstrom February Same Store Sales, www.nordstrom.com
Walmart, Walmart Reports February Sales (PDF), www.walmartstores.com