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Wal-Mart's Holiday Worries

Wal-Mart (NYSE: WMT  ) , in its weekly recorded same-store sales update, said this morning that it now expects comps to trend towards the lower end of its 3%-5% forecast. The gloomy news from the world's largest retailer casts another shadow over the prospects for a prosperous holiday season for U.S. retailers. (Wal-Mart cast the first shadow when it released Q3 earnings and raised questions about the financial health of the American shopper.)

Economists have been calling for holiday sales to rise 5%-7% over last year, which was one of the weakest shopping seasons in decades. So far, though, it's been touch and go for retailers, as early winter storms have blanketed parts of the country with snow for two weekends in a row.

The news yesterday of Saddam Hussein's capture prompted some analysts to predict that consumer confidence and spending will go up as a result. Many people were probably glued to the TV for much of Sunday, though, marveling as I was at Saddam's Grizzly Adams impersonation. Holiday shoppers may be happy that the dictator's in American hands, but whether that will actually translate into spending more cash (Yay, we captured a war criminal! Let's buy more toys for the kids!) remains to be seen.

Wal-Mart noted that fewer shoppers strolled its aisles last week compared to last year, supporting the idea that people are shopping closer and closer to Christmas. The retailer's results also exclude gift cards, which aren't counted in sales until they're redeemed.

Target (NYSE: TGT  ) gives its weekly update after the close today, and that should offer further insight into how the current holiday situation's shaping up. We still have some time to go, so it seems premature to declare it a bust just yet, however troubling Wal-Mart's words may be.

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Related Tickers

10/21/2016 4:00 PM
TGT $68.23 Up +0.52 +0.77%
Target CAPS Rating: ***
WMT $68.34 Down -0.39 -0.57%
Wal-Mart Stores CAPS Rating: ***