Wal-Mart Sales Stoke Recovery Fears
By James Politi in New York and Chris Giles in London
Worries about the sustainability of the US economic recovery were stoked on Sunday after the stores group Wal-Mart, seen as a bellwether for the country's retail sector, announced that sales had grown by only 0.7 percent in the year to November -- a much lower rate than the 2-4 percent increase Wal-Mart had estimated just 10 days ago.
The world's largest retailer revised its estimates down on Saturday evening after disappointing sales on "Black Friday," the day after Thanksgiving and traditionally one of the biggest shopping days in the US.
The retailer reported that sales had fallen "below plan" in the last week of November and sales growth was down on the 2.8 percent annual rate it had reported for October.
The weakness suffered by Wal-Mart, if reflected elsewhere, would add to concerns about the durability of the economic upturn. Any widespread reluctance by consumers to maintain their free and easy spending habits would slow the economy sharply.
In recent years, and even in the recession of 2001, US consumers defied repeated predictions that their appetite for new goods would diminish. A widespread slowdown of consumer spending would also add to recent dollar-related concerns in other countries about the prospects for exports to the US.
Although Wal-Mart reported strong sales of digital cameras, TV/DVD combo boxes, learning toys, and video games, it said "customer traffic declined toward the end of the week."
Bill Breemer, head of America's Research Group, a consumer research firm that surveyed 1,000 shoppers every night over the long weekend said that one reason for the slow sales at Wal-Mart could be that it did not discount as heavily as other retailers.
"This year they did not get nearly as aggressive on the early-bird specials, and it cost them," he said, adding that rivals such as JC Penney, Best Buy, Sears, and Circuit City had discounted more deeply this year.
The lacklustre sales at Wal-Mart also appeared to be the result of higher energy prices in particular that of heating gas.
Scott Krugman, spokesman for the National Retail Federation, said discounters were especially vulnerable to the higher gas prices because it hit their customers' disposable income.
Mr Beemer's survey found that shopping levels overall on Friday were flat or down as much as 5 percent. But other surveys painted a more optimistic picture.
Preliminary data from research firms appeared to show a growth in overall traffic and sales compared with last year with the most encouraging numbers from Shoppertrak showing sales on Friday grew 10.8 percent from a year ago to $8 billion.
Visa USA said spending on its cards rose 15.5 percent to $4.1 billion although experts cautioned that this number may be more a reflection of the increased use of credit cards.
The National Retail Federation is predicting a strong holiday shopping season, with sales up 4.5 percent to about $220 billion over the whole period.