Wal-Mart Stores Inc.'s (WMT) shares dipped 1 percent early Monday as Wall Street tried to determine what caused surprisingly weak November sales and looked ahead nervously to a make-or-break December.

The world's biggest retailer, which estimated Saturday that November sales fell 0.1 percent at its U.S. stores open at least a year, gave little detail into sales trends and said nothing about Black Friday, the day after Thanksgiving that marks the traditional start to the holiday shopping season.

Wal-Mart will issue a final November report Thursday. If the preliminary estimate stands, it would be Wal-Mart's first monthly same-store sales decline since April 1996.

"The bottom line is that now more is resting on December's shoulders," Goldman Sachs (GS)analyst Adrianne Shapira wrote in a research note.

To make its fourth-quarter same-store sales forecast for 1 percent to 2 percent growth, Wal-Mart will need at least a 2 percent gain in December, she noted.

In theory, December should be an easier month for Wal-Mart. Last year, December same-store sales rose just 2.2 percent, well below November 2005's 4.3 percent increase.

Wal-Mart has blamed recent sales weakness on a myriad of factors including disruption from remodeling projects at hundreds of its stores, tough comparisons against last year's hurricane-inflated sales, and mixed response to its trendy Metro 7 women's clothing line.

The retailer is taking a holiday-season break from store remodeling, so that should help December.

But J.P. Morgan (JPM) analyst Charles Grom said he was beginning to wonder whether Wal-Mart's problems ran deeper.

"While the (November sales) results were more or less in line with expectations, we continue to scratch our heads as to why sales are not improving provided the precipitous drop in gas prices and stable consumer confidence levels," he wrote in a note to clients.

Grom questioned why Wal-Mart was not seeing a bigger lift in sales from its much-discussed $4 generic drugs program, which was rolled out to all of its U.S. pharmacies Monday, and said the retailer could be losing market share to major food retailers.


Analysts said Wal-Mart got off to a strong start on Black Friday, with customers lining up before dawn to grab bargain-priced electronics.

Demand seemed to peter out, however, and analysts worried that customers cherry-picked heavily discounted items and skipped over higher-margin goods in other parts of the store.

Wal-Mart hogged the headlines with early price discounts in October and November aimed at convincing shoppers that its stores offered the best value, but many analysts have said the markdowns were no deeper than last year's, and the biggest change was that Wal-Mart was savvier at promoting them.

Wal-Mart's stock, which was up nearly 10 percent over the past three months, fell 62 cents, or 1.3 percent, to $47.25 in early New York Stock Exchange trading. Target Corp. (TGT), which had gained some 23 percent over the three-month period, edged up 13 cents to $57.84 on the NYSE.

"Now, more than ever, Wal-Mart is a 'show-me' stock," Oppenheimer & Co. analyst Bernard Sosnick wrote in a research note. "We steadfastly believe Wal-Mart is improving but expect pressure on Wal-Mart shares until the company proves it has turned the corner."