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Wal-Mart's gas pains
Sure, the huge retailer can't super grow forever but gas and competition is obviously taking a bite.
April 7, 2005: 8:42 AM EDT

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NEW YORK (CNN/Money) - Wal-Mart sales were weak in April ... is this a sign that high gas prices and a spotty labor market are taking a toll on consumers, or is this due more to the increased competition that the retailing giant faces from discounters like Target and Kohl's?

In March, Wal-Mart same-store sales rose 4.3 percent, trailing Costco whose sales were up 7 percent. Looking ahead to April, Wal-Mart says its sales will be flat to up 2 percent in April, a pathetic showing considering that back in the boom times it was not uncommon for Wal-Mart sales to grow by 10 percent or more in a month.

It's true that when a chain gets as humongous as Wal-Mart it's tough to keep growing sales at such a fast pace. That's why they are trying to expand into urban areas like New York City (where a new Wal-Mart was recently blocked).

But it's also true that high and rising gas prices cut disposable income for Wal-Mart's core customers, folks who live in areas where they have to jump in their cars and drive substantial distances to shop. The problem for Wal-Mart is that it doesn't look like the painful gas prices or clever competitors are going away anytime soon.

For more HaysWire, click here.

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-- Kathleen Hays is economics correspondent for CNN and contributes to Lou Dobbs Tonight.  Top of page

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