After Costco Wholesale Corp. (COST) announced poor sales yesterday, many thought Wal-Mart would suffer the same fate, based on recent struggles in same-store sales and the declining housing market.
That wasn't to be though, as Wal-Mart Stores Inc. (WMT) reported much higher same-store sales, with a 3.1 percent increase in August for the United States. That is almost double the forecasts put forth by analysts, who had expected only about 1.6 percent in sales. Wal-Mart itself had expected similar numbers as the analysts. The gains were the best for Wal-Mart since March.
The Sam's Club division same-store sales grew by a healthy 5.2 percent, which serves small business owners, while the Wal-Mart stores grew by 2.8 percent with same-store sales.
Oppenheimer analyst Bernard Sosnick said, "We interpret this as an indication that the clearance of summer apparel is proceeding better than had been expected a few weeks ago."
With the bad decision to enter the high-end clothing market, among others, Wal-Mart started slowing down in same-store sales as their core customers rejected the offerings.
To get things kickstarted again, they announced a huge price cut on back-to-school suplies, cutting prices by up to 50 percent on 16,000 items. The strategy obviously worked and won back the consumers who have made Wal-Mart what it is. Children's clothing and electronics sold especially well in August.
In the four weeks ending on August 31, net sales rose by 9.3 percent, to end at $28.22 billion.
It's good to see the company go back to what it knows how to do and does best.
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