(By Mayur Pahilajani - iStockAnalyst Writer)
(New York, NY) - Wal-Mart surprised Wall Street with gains in January same-store sales, but overall retail sector remained weak as more number of shoppers were attracted towards discounted products.
Most of the retailers have been trying to extract some profit with higher prices on the consumer products amid rising unemployment rate and deepening recession. The overall retail sector remains an underperformer from the economists' perspective.
Excluding discounted retailers, $4 medicines and a few specialty chains, sales at other leading chain stores suffered last month and failed to meet the expectations of the market analysts on declining demand for products.
Same-store sales at some of the retailers were hit less harder as they benefited from the lower gasoline rates. The front-month contract prices remained at multi-year low levels of $35 and $50.
Same-store sales, or sales at stores open at least a year, are used by the investors to gauge a retailer's overall health and future performance. But the investors may have to wait for another quarter to receive Wal-Mart's report as it said it will stop providing a monthly forecast, citing difficulty in predicting consumer behavior.
"Retail sales continued their downward slide in January as retailers and consumers are getting pounded by the deepest recession in decades," Ken Perkins, president of sales tracker Retail Metrics, wrote in a report Thursday, according to CNN.
"This is not a good time for retailers," said Craig Johnson, president of retail consulting group Customer Growth Partners. "If people are fearful for their jobs, they will tightly hold on to their money and not spend it. This [situation] makes it very difficult for retailers."
Wal-Mart Stores, Inc. (NYSE: WMT), which is the world’s largest retailer, reported Thursday that January same-store sales, including fuel, increased by 1.5 percent. Excluding gasoline costs, same-store sales increased by 2.1 percent, topping the market expectations of 1.1 percent.
Sales across the world last month increased by 1.8 percent. The Bentonville, Arkansas-based company, which will now disclose performance targets to Wall Street four times a year, expects to see an increase in same-store sales in the range of 1 to 3 percent, during the period from Jan. 31 through May 1.
“Rather than providing monthly guidance 12 times a year, we will provide 13-week guidance four times a year, based on the NRF retail calendar,” said Tom Schoewe, executive vice president and chief financial officer.
