Wal-mart's finding a lump of coal in its stocking.
Not only has the world's largest retailer warned Wall Street it will report a same-store sales decline of 0.5% in November-which includes the important Black Friday results-but it's anticipating December will not bring redemption. Despite aggressive price promotions and an early advertising campaign, Wal-Mart estimates same-store sales will, at best, top out at 1%.
By comparison, rival Target Stores is expected to log a same-store sales boost of about 4.5% in December and last week reported same-store sales gains of 5.9% for November.
Across the retail sector, same-store sales gains bettered Wal-Mart's, though the group slipped to 2.3% in November, compared to gains of 3.7% during the same period last year, according to an analysis of 60 retailers by Columbus-based research firm Retail Forward.
The woes among discount retailers are coupled with traffic declines. Only 55% of shoppers are expected to go to discount stores and supercenters during the holiday season, down from the 61% who shopped at those outlets in 2005, according to a Retail Forward shopper survey. The drop comes as more consumers report they will buy online-43% compared to just 36% last Christmas.
The poor gains were also shared at discount department stores, apparel-and-accessory stores and dollar stores. JC Penney was among the retailers who were languishing. For the four weeks ending Nov. 25, same-store sales rose just 1.4% at Penney's compared to a gain of 3.6% in November 2005. The retailer also warned its sales would clock in at the low single digits over the next five weeks.
Christmas is looking bright for others. Federated Department Stores, just two months into its first-ever national branding campaign behind the Macy's banner, reported same-store sales gains of 8.5%. Luxury retailers are faring well, including upscale department-store chain Nordstrom, where gains came in at 5.4%.
Are Wal-Mart's poor results an indication that it's failing in its efforts to remake its brand?
"Wal-Mart still needs time," said Ken Perkins, a research analyst with Retail Metrics, but he added that the results are a sign the chain is struggling to bring affluent customers who go there to shop for bleach and detergent across the aisle to buy apparel.