CHICAGO ( Reuters) - Wal-Mart Stores Inc. (WMT.N) predicted a rare decline in monthly sales on Saturday, even as U.S. bargain-hunters jammed stores in search of gifts at the start of the crucial holiday shopping season.
Wal-Mart, the world's biggest retailer, sounded a cautious note for retailers as they began a second day of Thanksgiving weekend sales with deep discounts and early bird specials on items ranging from cashmere sweaters to plasma televisions.
Wal-Mart estimated that November sales fell 0.1 percent at its U.S. stores open at least a year -- a closely watched retail measure known as same-store sales.
The retailer will provide a final monthly sales report on Thursday, when most other major chain stores report their November figures. This would mark Wal-Mart's first monthly same-store sales decline since April 1996.
Wal-Mart had expected same-store sales to be flat compared with the same period last year, which many Wall Street analysts had viewed as disappointing. Wal-Mart's four-week November sales period ended on Friday.
Wal-Mart had a same-store sales decline of 0.1 percent for the month of November--and this includes the Black Friday sales. This is a disturbing figure since consumer spending represents about two-thirds of the economy. The Times story goes on to report:
[Tthe] November-December holiday season makes up anywhere from 20 percent to 40 percent of retailers' annual sales.
The National Retail Federation trade group expects holiday sales growth of about 5 percent, which would be a slowdown from last year's surprisingly strong 6.1 percent gain.
I found a second interesting story off MSNBC which is reporting consumer sentiment:
NEW YORK - U.S. consumer sentiment ended weaker in November than October, a private survey showed on Wednesday, as consumers pared their view of current and future financial conditions.
The University of Michigan's final reading on consumer sentiment in November was 92.1, down from October's 93.6 final, said sources who saw the subscription-only report.
The median forecast of Wall Street economists polled by Reuters was for a reading of 93.1.
University of Michigan's preliminary November gauge on consumer sentiment was 92.3.
Although lower than their October levels, the November University of Michigan figures were not too far below their highs of the year.
So what do these two stories mean? The one concern that I have is when will consumer spending start to drop? We've seen enough stories over the past year about the housing slowdown and the low wage growth. But these stories have yet to shock the consumer spending--at least until now. Wal-Mart is the world's biggest retailer. How Wal-Mart performs during this holiday season is certainly one indication of how the American consumer will be spending, and ultimately will provide another snapshot of how the U.S. economy is performing. And yet even with all the stories in the media about the Black Friday Christmas rush, we also get this hard statistic regarding a drop in Wal-Mart's same-store sales for the month of November. And to make matters worst, the University of Michigan's consumer sentiment has also dropped slightly.
Are we going to see a blue Christmas for retailers this year?
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