Wal-Mart posts worst sales ever as US retail figures slump
London Guardian | May 11, 2007
Wal-Mart, the world's largest retailer, yesterday posted its worst monthly sales figures since its records began in 1980.
The company said same store sales fell 3.5% in April on the same month a year ago. Same store sales measure the performance of stores that have been open for at least 12 months.
But Wal-Mart was not the only US retailer turning in a poor performance in April, triggering fears that the US housing slump might be spilling over into consumer spending and that the economy might be taking a turn for the worse.
Federated Department Stores, the company behind Macy's and Bloomingdale's, reported a 2.2% fall in April sales. The Gap continued to underperform, posting a 16% drop in sales - the retailer's long-running difficulties led to the departure of its chief executive in January. Abercrombie & Fitch, the clothing brand that recently opened in London, said April sales were down by 15%. The discounter Target, Wal-Mart's biggest rival, reported a 6.1% decline in same store April sales.
The UBS International Council of Shopping Centres tallies the results of more than 50 of the leading retailers in the US and said combined sales in April had declined by 2.3%, the biggest drop since the index was first started in 1970. "The slowdown is at hand," said chief economist at the council Michael Niemira. The retail slowdown unnerved Wall Street and the Dow Jones industrial average closed down 147 points, or more than 1%, at 13,215 points. America's widening trade deficit also contributed to economic worries.
Some analysts cautioned that the retail figures had been worsened by cold weather in April, compared with a warm month a year ago that had driven sales of spring clothing. Easter had also fallen early this year, pulling sales forward into March.
Wal-Mart had predicted an April decline of up to 2%. It said sales of clothing and home goods were lower than expected. As well as blaming the weather and Easter, Wal-Mart said the slowing economy was a big factor in its sales decline. It noted that consumers were increasingly worried about rising petrol prices. Wal-Mart's customers, who tend to be in the lower income bracket, are especially vulnerable to rising energy and fuel costs. Wal-Mart is still forecasting an improvement in May sales of between 1% and 2%. Group sales, including new openings, rose 3.7% to $26.57bn in April alone.
More upmarket retailers did appear to have escaped the downturn. Saks reported an 11.7% same store gain during the month and Nordstrom was 3.3% ahead. American Eagle Outfitters, in the same bracket as The Gap and Abercrombie, recorded a 10% drop.
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