February was a bitterly cold month for Inside Value selection Wal-Mart
Wal-Mart reported a 0.9% gain in same-store sales -- sales at stores open more than a year -- during February. Its Wal-Mart locations managed only 0.4% growth, while its Sam's Club warehouse stores were much stronger, posting a 3.9% increase. Both businesses reported solid gains in the grocery, consumables, and pharmacy areas. The stragglers for Wal-Mart were the home and apparel areas, as well as the hardlines, which includes electronics, tools, and appliances.
I wouldn't expect the trend to reverse anytime soon. The company sees the weakness in home and apparel sales continuing through spring. Now, I'm not sure how, but Wal-Mart was able to specifically identify the poor weather as the cause for the slowdown in buyers' willingness to purchase hardline items. Apparently, competitor Target
Despite the slow growth and weak excuses, Wal-Mart continues to look like a bargain, in my opinion. It increased its annual dividend by 31% last week, and has showed better growth internationally. While overall sales at its Wal-Mart stores increased just 5.6% for February, its international sales climbed 18.7%. As its growth opportunities continue to shrink in the U.S. market, it will be important for the company to continue to grow outside the U.S.
While I wouldn't expect the retail giant to start reporting double-digit comps growth anytime soon, if ever, I do expect it to continue its modest growth. Though it would be better to see it get its comps growth closer to 3% or 4%, I wouldn't be too concerned if it had a few months like this one every now and then.
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