Was April good for you? It certainly was for Wal-Mart (NYSE:WMT). The world's largest retailer posted a 6.8% gain in comps for the month of April. The company was originally forecasting same-store sales to grow between 4% and 6% higher.
The welcome surprise at the empire that Sam Walton built isn't likely limited to Wal-Mart. All things being equal, a robust showing from a bellwether like Wal-Mart should bode well for everything from the retail industry as a whole to snapshots of consumer discretionary spending trends in particular.
Even if you don't shop there, don't assume that Wal-Mart's pulse isn't a great vein to tap. Now, if other retailers begin using high gas prices or questionable weather to justify any potential shortcomings, you can call them out on the basis of Wal-Mart's numbers.
The strength in Wal-Mart's report stems mostly from the placement of the Easter holiday. It was a March event in 2005, but crept into April here in 2006. With many schools taking a break around the seasonal holiday, shopping activity picks up with the available time.
Wal-Mart rival Target (NYSE:TGT) should come through with a similarly strong report for April this week. Even a troubled operator like Sears' (NASDAQ:SHLD) Kmart chain may prevail, given the favorable seasonal tailwind.
It will be important to see if the strong gains continue as you move up the market and away from the discounters. If traditional retailers like Federated (NYSE:FD) and Dillard's (NYSE:DDS) also fare respectably, it will bode well for the retail sector, which could use a little help. When you hear that mall landlord Mills Corp. (NYSE:MLS) is having financial problems, it's a good as sign as any that the industry could use a shot in the arm.
Wal-Mart came armed with a pretty big shot. Now it's time to see if the immunity inoculation worked.
Longtime Fool contributor Rick Munarriz has probably spent more at Wal-Mart's online store than at its offline empire in recent years. He does not own shares in any of the companies mentioned in this story. T he Fool has a disclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
