NEW YORK – Wal-Mart Stores Inc (WMT) reported a higher-than-expected 3.1 percent rise in August sales Thursday at its U.S. stores open at least a year as the retailer cut prices to entice more back-to-school shoppers.
The 3.1 percent rise beat analysts' average forecast of a 1.6 percent rise, according to Reuters Estimates, and was above Wal-Mart's own forecast for an increase between 1 percent and 2 percent.
It marked Wal-Mart's biggest same-store sales gain since March, when the store's results were boosted by the Easter holiday, and came a day after Costco Wholesale Corp (COST) posted disappointing sales results, sparking worries that the deteriorating housing market was crimping consumers' spending.
"The best same-store sales gain in quite some time reinforced our belief that Wal-Mart is in the early stage of a reawakening and major changes for the better," wrote Oppenheimer analyst Bernard Sosnick in a research note.
For September, Wal-Mart forecast U.S. same-store sales to rise between 1 percent and 3 percent.
Its shares rose 54 cents, or 1.3 percent to $42.99 in late morning New York Stock Exchange trading.
IMPROVING THE SALES TREND
Wal-Mart is working to improve sales at its U.S. stores after its same-store sales rose at their slowest pace on record last fiscal year.
It reduced the number of supercenters it plans to open and is emphasizing its low prices after its attempts last year to play down its discount roots and sell higher-margin goods, such as trendy clothes, backfired with its lower-income consumers.
To jump-start its back-to-school sales, it said in July that it was cutting prices by as much as 50 percent on 16,000 items such as school supplies and backpacks.
Wal-Mart said that the price cuts helped spur sales of back-to-school items, including electronics and children's apparel in August.
Net sales in the four weeks that ended Aug. 31 rose 9.3 percent to $28.22 billion.
Same-store sales in its Sam's Club warehouse division, which caters to small business customers, rose 5.2 percent, while same-store sales rose 2.8 percent at its namesake Wal-Mart stores.
The retailer expects its struggling home and apparel businesses to improve in the fourth quarter, and it said it was "pleased" with its inventory position at the end of August.
"We interpret this as an indication that the clearance of summer apparel is proceeding better than had been expected a few weeks ago," Sosnick wrote.
"The sooner stores are set with the full fall assortment, the better sales and earnings should be."