It came as a mild surprise this morning when Wal-Mart (NYSE:WMT) announced that its same-store sales were on track for the month of May. After all, I live in the Midwest and we have had so much rain this month that even Noah would have had some difficulty going shopping.
In its weekly recorded message, Wal-Mart informed the investment community that its May same-store sales were on target with the expected increase of 4% to 6%.
It came as no surprise to me that Wal-Mart's strongest markets over the past few weeks were in the East and Northeast, where the weather has solicited customers to use their cars instead of a boat. Despite some softer than expected sales this past week, Wal-Mart has seen strength in toys, food, pet supplies, and certain electronics. With people ramping up for the big Memorial Day holiday, which falls five days later than last year, the company should see the benefit of these sales this week.
Wal-Mart opened 23 new stores last week -- 18 as Supercenters and the remaining five as discount stores. These additions come at a collective "gulp" in the retail industry over rising gas and food prices.
Major retailers such as Target (NYSE:TGT), Federated Department Stores (NYSE:FD), Kohl's (NYSE:KSS), Costco (NASDAQ:COST), Toys "R" Us (NYSE:TOY), Home Depot (NYSE:HD), and Lowe's (NYSE:LOW) all must be concerned about the potential impact of higher gas and food prices on consumers' discretionary income.
The one constant in the retail arena is that if you give the customer a solid product for a fair price they will continue to walk through your doors. With the Internet experiencing explosive growth with successful sites such as eBay (NASDAQ:EBAY) and Amazon.com (NASDAQ:AMZN), the pressure continues to be on traditional retailers to give customers a reason to shop in person.
Even though Wal-Mart's sales are moving along as expected, the competition among retailers should continue to be as intense as trying to board a New York City subway. A word of advice to subway riders and retailers: If you're not aggressive, then opportunity will roll right on by.
Will retailers be impacted by rising gas and food prices? Give your thoughts with other Fools on the Wal-Mart discussion board.
Fool contributor Phil Wohl spent more than 12 years on Wall Street and now concentrates his writing on more fictional characters. He has no stake in any firm mentioned above.
