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    January Roundup: Economy Affects Sales at Big-box Retailers

    Most saw only slight lifts for the month, and Target and Costco warn that upcoming quarterly earnings will be lower than anticipated.

    The major big-box retailers wrestled with the ailing economy during January, and it showed for the most part in their sales results for the month, although Wal-Mart's Walmart U.S. division provided a ray of light among the general gloom

    Wal-Mart Stores, Inc. reported a January 2009 net sales increase of 1.8 percent to $27.742 billion, from $27.263 billion last year, while comps without fuel rose 2.1 percent for the month vs. 0.5 percent in January 2008 (with fuel, the comps rose 1.5 percent vs. 0.9 percent last year). A particularly strong performer for the Bentonville, Ark.-based megaretailer was its Walmart U.S. division, which saw a 6.1 percent net sales rise to $17.694 billion in January 2009, from $16.937 in the year-ago period. Comps at the divsion were strong in grocery and health and wellness, and Walmart U.S. met or surpassed expectations in home, entertainment and hardlines.

    "Our sales results were driven by a continuation of gains in customer traffic," noted Wal-Mart Stores vice chairman Eduardo Castro-Wright. "Clearly, our stores are performing very well, as we continue to emphasize customer service and innovative merchandising."

    Meawhile, net sales for January 2009 were down 0.8 percent at Sam's Club, and although comps without fuel rose 2.4 percent for the month, compared with 2.1 percent in January 2008, with fuel they were down 1.5 percent, vs. 4.9 percent in the year-ago period. Wal-Mart’s International division fared the worst in January 2009, however: Net sales declined 7.3 percent.

    The company additionally said that rather than providing monthly guidance 12 times a year, it would issue 13-week guidance quarterly, based on the NRF retail calendar. Wal-Mart referred to the latter guidance as "a more appropriate measure for our investors, particularly in volatile times when consumer swings are more difficult to predict." According to the company's current guidance, ist U.S. comps without fuel during the period from Jan. 31 through May 1 are expected to increase between 1 percent and 3 percent, with the shift of Easter from March to April affecting comps in those months.

    In other Wal-Mart news, the Wal-Mart Foundation said yesterday that it would award to the U.S. Conference of Mayors and Veterans Green Jobs grants totaling $5.7 million to support the creation of green jobs in the United States.

    BJ's Wholesale Club, Inc. said yesterday that total sales for January edged up just 0.9 percent to $656.7 million from $651.0 million in January 2008, while comps decreased 0.7 percent, including a negative impact from sales of gasoline of about 8.3 percent. Excluding gas sales, merchandise comps rose 7.6 percent in January.

    For the year-ago period the Natick, Mass.-based company posted a comparable-club sales increase of 7.8 percent, including a contribution from sales of gas of 2.6 percent and a negative impact from pharmacy closures of 0.3 percent. During January 2009, comparable club sales of food at BJ's increased about 11 percent and general merchandise sales grew by about 2 percent.

    The company noted that for its fourth quarter of 2008, total sales increased 3.2 percent to $2.5 billion, and comps grew 1.7 percent, including a negative impact from sales of gas of 4.7 percent.

    Amid a January same-store sales decline of 3.3 percent, Minneapolis-based Target Corp. posted a slight net sales gain of 0.8 percent to $4 billion vs. the same four-week period last year and warned that it expects its full fourth-quarter earnings to fall below Wall Street expectations, due to holiday discounts, an "adverse sales mix" and recently announced layoffs.

    Costco Wholesale Corp.'s net sales for January were $5.10 billion for the month of January, compared with $5.11 billion last year, although its U.S. comps for the month, excluding the negative impacts from gasoline deflation rose 4 percent. Like Target, the Issaquah, Wash.-based company expects its upcoming second-quarter earnings to be “substantially below” expectations.

    "General economic conditions have negatively affected our sales, primarily in nonfoods and merchandise margins," said Costco CFO Richard Galanti. "Our margins have also been impacted by aggressive merchandise pricing in our core merchandise business to drive sales and increase market share, particularly during the first four weeks of the fiscal quarter. To a lesser extent, we are also being adversely affected by lower year-over-year profits associated with our gasoline business, and international profits have been hurt as a result of the strengthening U.S. dollar. Given the uncertainties surrounding the economy, including consumer behavior, we will not be providing earnings guidance for the remainder of this fiscal year."

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