It's not enough to have earnings warnings now. Same-store sales warnings are becoming increasingly fashionable, as retailers are finding it ever harder to lure customers into spending.
Supporting our skeptical view on rosy August retail sales, the world's biggest retailer, Wal-Mart
The company said the same thing about its August comps, and August growth ended up at only 3.8%. The retailer spooked folks looking for a turnaround in consumer spending back then, and it spooked them again today.
Wal-Mart is one of the few retailers with strong September 2001 comps growth to contend with. Comps grew 6.3% in September of last year, as customers stocked up on flashlights, batteries, gas cans, and bottled water. That behavior skews things, from a comparative view.
However, it's still a bleak retail outlook. As of last Monday, Wal-Mart said sales were still trending in the 4% to 6% range, and it looked like consumers were returning (at least marginally) to stores. Now, with the month in fuller view and weakness apparent, Wal-Mart's hoped-for September improvement is nowhere to be found, and the implication for other retailers isn't good.
Investors have been waiting for consumer spending to broadly strengthen, and for much of the last year, Wal-Mart and other discounters have been the only consistent gainers. It now appears that the American shopper is scaling back even more. It'll be ugly for all retailers should this trend continue. Back-to-school spending proved to be a joke in August, and September's not looking any better. As of now, there's no real reason to believe that the holiday shopping season will be strong enough to turn around the current slump.
But, hey, it's just one-month's comps from a single retail company, right? Well, yes, but when that company is Wal-Mart, it pays to pay attention. If shoppers aren't buying from Wal-Mart, you can bet they really aren't buying from places like Nordstrom