Shares of Wal-Mart Stores Inc. were up almost 3 percent in early trading Tuesday, after it raised its June sales outlook over the weekend. It cited increased demand for seasonal merchandise fueled by warmer weather.
The world’s largest retailer said Saturday that it expects to post a 4.5 percent increase in sales at stores opened at least a year, known as same-store sales. Same-store sales are considered the best indicator of a retailer’s health. It had originally expected to post a same-store sales gain of between 2 percent to 4 percent.
This will be Wal-Mart’s biggest gain since May 2004 when it announced a 5.9 percent increase, according to Thomson Financial.
Wal-Mart also said in its release that general merchandise sales were stronger than food, which reverses a trend seen over the last several months and bodes well for profits in the quarter. General merchandise carries higher profit margins than food. The company also said that the Northeast was the strongest region.
Wal-Mart’s sales acceleration in June is a relief for the retailer which has been struggling with tepid sales for months. Like many merchants, business this spring was hurt by cooler-than-normal temperatures. But the discounter also has been more vulnerable than rival Target Corp. to higher gasoline prices and job worries, which have caused its bargain-hunting low-income shopper to hold back spending.
From the January through May period, same-store sales at Wal-Mart averaged a 2.8 percent gain. Target Corp., which appeals to a higher-income consumer with its trendier merchandise, averaged a 6.6 percent gain in the five-month period. Last week, Target said that same-store sales in June are expected to surpass the projected 4 to 6 percent range.
Wal-Mart and other leading retailers are expected to report their June results on Thursday. June — a time when retailers clear out their summer goods to make room for fall merchandise— is the second most important month after December in a retailer’s sales calendar.