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Wal-Mart Says U.S. Comparable-Store Sales Increased 1.1% in May
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By Lauren Coleman-Lochner

June 7 (Bloomberg) -- Wal-Mart Stores Inc., the world's largest retailer, said May sales at U.S. stores open at least a year rose 1.1 percent, helped by demand for holiday barbecue and lawn-and-garden goods.

Wal-Mart had predicted a May gain of 1 percent to 2 percent. Sales this month may be unchanged or rise as much as 2 percent, the Bentonville, Arkansas-based company said today in a statement distributed by PR Newswire.

Wal-Mart is paring plans to open new locations in part to focus on older U.S. stores, where sales have slowed. Memorial Day weekend, which wasn't included in the May tally last year, boosted sales by about 1.5 percentage points, said Dana Telsey, chief executive officer of Telsey Advisory Group, a New York research firm.

``Sales expectations remain low at Wal-Mart,'' Charles Grom, an analyst at JPMorgan Securities, wrote in a report yesterday. ``Trends in home and apparel are still in rough shape.''

Same-store sales rose 0.3 percent at the company's Wal-Mart chain of discount stores and supercenters and 5.4 percent at its Sam's Club warehouse unit. Figures exclude fuel.

Analysts had estimated May same-store sales would increase 1.2 percent, according to data compiled by Retail Metrics LLC, a research firm based in Swampscott, Massachusetts.

At the company's annual meeting in Fayetteville, Arkansas, last week, executives said they would open no more than 200 U.S. stores this year, a cut from previous plans for up to 270. Wal- Mart also said it will buy back as much as $15 billion of shares.

Ratings Upgrade

Both actions prompted at least six U.S. brokerage firms to upgrade their ratings on the retailer's shares.

``We understand that our comp-store sales, particularly in the U.S., aren't what they need to be,'' Chief Financial Officer Tom Schoewe said during a press conference after the shareholder meeting June 1. Last year, same-store sales rose 2.1 percent, the smallest gain since at least 1980.

Wal-Mart has returned to trumpeting its message as the lowest-cost retailer after trying to position itself as a destination for more fashionable clothing and home goods.

``As we've seen, it's proven hard to be both,'' Telsey said in a June 5 interview.

Mark Husson, an analyst at HSBC Securities in New York, said June 4 that attempts to sell more expensive goods weren't working.

``Women will buy diapers, but not the crib; sweatpants, but not the dress; flip flops, but not the shoes,'' he wrote.

Benchmark

Most U.S. retailers report May sales today. Same-store sales are considered an industry benchmark because they measure the health of established locations.

Shares of Wal-Mart rose 23 cents to $50.75 yesterday in New York Stock Exchange composite trading. They have gained 6.6 percent since May 31, the day before Wal-Mart announced its share buyback and reduced plans for expansion.

Target Corp., the second-largest discount chain, said May 21 that same-store sales were on track to rise between 5 percent and 7 percent for the month. Wal-Mart operates 4,058 U.S. stores, compared with 1,500 for Target.