Wal-Mart blames late Easter for slow sales
No. 1 retailer reports a March same-store sales increase well below analysts' expectations.
NEW YORK (CNNMoney.com) -- Wal-Mart Stores reported March sales Thursday that were much softer than analysts' forecasts, citing an "Easter calendar shift" that it expects to push holiday-related purchases into April.
Analysts, on average, had expected the company to post an increase of 3.2% in March, according to sales tracker Thomson Reuters.
Although comparable store traffic increased in the month, the retailer said the average checkout total was lower, "mostly due to the Easter shift and, to a lesser degree, inflation at a lower rate than last year in grocery."
Health and wellness items, home products, and grocery items were Wal-Mart's strongest performing categories in March.
"The Easter shift does matter. There's no question that it is a legitimate concern for retailers," said Scott Hoyt, senior director of consumer economics for Moody's Economy.com.
But Scott added, "whether Easter is a complete explanation of the disappointment from retailers last month is an open question. I think it explains part of the weakness."
Wal-Mart also raised its first-quarter profit guidance, saying it expects earnings per share for the period "will be toward the high end of the range" it provided of between 72 to 77 cents a share. Analysts expect the company to post a profit of 76 cents a share.
"The combined 3.1% comparable sales for Wal-Mart [U.S.] and Sam's Club we reported for the past nine weeks shows the strength of our underlying operations," Tom Schoewe, Wal-Mart's chief financial officer said in a statement.
Thomson Reuters retail analyst Jharonne Martis said stores were expected to blame a later Easter this year - with the holiday falling on April 12 versus March 23 last year - pushing holiday shopping into this month.
Overall, Thomson Reuters said March same-store sales for a group of 31 retailers that includes Wal-Mart declined to a worse-than-forecast 1.8%, versus an initial forecast for a 0.9% drop, and following a 0.3% increase in February.
February's gain had fueled hope that the hard-hit retailing sector was starting to see some signs of recovery.
Unfortunately, the underlying [economic] conditions are still not good enough to support a full-fledged recovery, Hoyt said.
"We're losing 600,000 to 700,000 jobs every month. That takes a severe toll on wages" and on consumers' ability to make discretionary purchases, he said.
Still, Hoyt said he expects some government incentives - including adjustments to unemployment insurance benefits, increases in food stamp payments and reduced employer tax withholdings under the stimulus package - will benefit both consumers and sellers.
"Retailers always say you have to look at March and April sales together. I think that's true," he said.
As far as March goes, the disappointments were widespread. Thomson Reuters said 54% of retailers beat analysts' expectations for the month, but 46% missed forecasts.
Several teen specialty stores took a hit last month. Wet Seal sales fell 11.4% while Zumiez sales tumbled 17.9%.
Wholesale club operator Costco (COST, Fortune 500) delivered a mixed performance. The retailer, which also sells gasoline at its stores reported a 5% same-store sales decline, including gasoline sales, due to falling prices at the pump. But excluding gasoline purchases, the company said its sales increased 3% at its U.S. stores.
There were some positive performances. Specialty fashion stores The Buckle and Hot Topic continued to show strength, with The Buckle registering a 14.7% sales gain last month while Hot Topic logged an increase of 7.1%.