Wal-Mart Raises Forecast For June Same-Store Sales

[HenryTo]

Encouraging signs for the giant retailer but I would say the stock is fairly valued here - unless the market goes into bubble valuations again or if the cyclical bull market has ended. P/E contraction, however, has been the norm at WMT since 2000 so I probably wouldn't buy any of it until we trade at a trailing P/E of less than 15 - for now.
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Wal-Mart Raises Forecast
For June Same-Store Sales

By JAMES COVERT
DOW JONES NEWSWIRES
July 2, 2005 1:14 p.m.

Wal-Mart Stores Inc. raised its forecast for June same-store sales, citing demand for seasonal and general merchandise.

The world's largest retailer on Saturday said it expects sales at stores open at least a year to increase 4.5%, up from its previous forecast of 2% to 4%. In addition to strong sales of seasonal items, Wal-Mart said sales of general merchandise were stronger than food sales.

Sales were strongest in the northeast, and "average ticket" prices drove same-store sales, Wal-Mart said.

Wal-Mart's sales have languished in the last few months, which the Bentonville, Ark., company has attributed in part to the fact that it isn't selling enough merchandise to higher-income customers. In May, Wal-Mart's same-store sales rose just 2.5%, at the low end of the company's expected range of 2% to 4%, while rival Target Corp. posted a 5.1% increase in same-store sales for the period. In April, such sales were up just 0.9% at Wal-Mart.

At the company's annual shareholders' meeting in early June, President and Chief Executive Lee Scott said the discount retailer is doing a strong job of catering to its core customers -- those who shop at Wal-Mart because the "have to save money" -- and that less-affluent customers will always be the discount retailer's focus. But Mr. Scott added, "we need to widen our appeal to a broader range of customer." That means improving the quality of the company's household goods and apparel, and improving its consumable offerings with "organic and natural food," he said.

Wal-Mart, and other major retailers are slated to report June sales on Thursday. The June period extends from May 28 to July 1.

Write to James Covert at james.covert@dowjones.com