Wal-Mart Cuts June Sales Outlook, Blames Poor Father's Day
{{#rendered}} {{/rendered}}Wal-Mart Stores Inc. (WMT) Monday lowered its June sales forecast because of poor Father's Day (search) demand and unusually cool weather that curbed sales of air conditioners and swimming pool supplies.
The world's biggest retailer now expects just a 2 percent to 4 percent increase in June sales at its U.S. stores open at least a year, a key retail measure known as same-store sales.
Wal-Mart had originally forecast a 4 percent to 6 percent same-store sales increase for June, but indicated last week that sales could miss that range.
{{#rendered}} {{/rendered}}Shares of Wal-Mart, which fell sharply last week following news that a judge allowed a record-large class-action lawsuit to proceed, were up 21 cents or 0.4 percent at $52.72 on the New York Stock Exchange (search) Monday.
Many analysts had expected a lackluster sales performance after the company's cautious outlook last week. Wal-Mart and most other top U.S. retailers will report June same-store sales on July 8.
Jeffrey Klinefelter, analyst with U.S. Bancorp Piper Jaffray, cut his June same-store sales growth forecast for Wal-Mart to 3.8 percent from 4.7 percent, but maintained his second-quarter earnings estimate at 60 cents per share, the low end of the company's forecast.
{{#rendered}} {{/rendered}}The June sales period covers five weeks instead of the more common four weeks, so it is considered a key driver of second-quarter earnings performance.
On a recorded message updating sales through June 25, Bentonville, Ark.-based Wal-Mart called Father's Day sales "disappointing," and blamed uncooperative weather in part for the poor demand.
A National Retail Federation survey released earlier in June found that people planned to spend less on Father's Day gifts than last year, possibly because high gasoline prices were cutting into household budgets.
{{#rendered}} {{/rendered}}The survey found that people planned to spend an average of $86.19 on gifts this year, down from $99.65 last year.
Wal-Mart said that the same week last year generated its strongest sales growth of the summer. This year, however, cool weather hurt sales of summer staples such as air conditioners, lawn and garden equipment and pool supplies.
The retailer said people bought cold-weather items including soup, hot cereal and hot chocolate instead. Food was among the top-selling categories for the week.