From Reuters via The Financial Express:
Wal-Mart Stores Inc investors will be focused on the retailer’s forecast for its new fiscal year and indications as to when sales at its US store base may finally strengthen when the world’s largest retailer reports fourth-quarter results on Tuesday.Wal-Mart ended its fiscal on January 31 after posting a string of paltry sales gains at its US stores opened at least a year ago, including a 0.1% decline in November.
In the face of store remodeling projects, limited opportunities for US growth, problems with its apparel offerings and a recent drop in temperatures that could pinch shoppers when heating bills roll in, investors are wondering when it US business will get back on track.
“That’s the $64,000 question,” said Patricia Edwards, a portfolio manager with Wentworth, Hauser and Violich, who tracks retail companies.
The retailer has already forecast tepid gains for February, saying it expects US same-store sales to rise 1% to 2%. Smaller rival Target Corp Research, on the other hand, expects February sales at its stores open at least a year to rise 4-6 %.
If the forecasts hold, Target's same-store sales gains would have exceeded Wal-Mart's in 42 of the last 43 months, according to Think Equity Partners. It looks to me like Target is humming on all cylinders,” said James Hardesty, president of Hardesty Capital Management, which owns Target shares. “They’ve found a niche that is above the discount chains, but below the high-end franchise department stores.”Wal-Mart is struggling as it has tried to widen its niche. Last year, it downplayed its discount roots to try to expand its image beyond that of a low-priced retailer. It stocked more upscale items such as organic food and plasma T Vs?, hoping wealthier shoppers would spend more in its stores. But its lower-income customers balked at some of the changes and, in the face of disappointing sales, Wal-Mart vowed its “most aggressive pricing strategy ever” for the holidays.
“Getting back to really every day low prices and making sure we were the price leader,” said Charles Holley, Wal-Mart’s treasurer, at a Citigroup conference this week. “That was very important to us in the fourth quarter.” In January, Wal-Mart maintained its fourth-quarter earnings forecast of 88 cents to 92 cents per share. Analysts, on average, expect it to earn 90 cents per share, according to Reuters estimates.
Posted by Laura - February 20, 2007 11:09 AM - In The News