How long can a slow economy mean good times at Wal-Mart?
The company is betting that the traffic boost from rebate checks will carry into June and that grocery sales will still be strong in the month ahead. That’s why they’re forecasting sales up between 2-4%. Costco , BJs and value-oriented stores all did well this May. Consumers still buy cheap basics during a downturn and the sales results are also boosted by gas and food price inflation.
Anything truly discretionary is weak right now. That’s why Target - which is dependent on apparel and home goods products (read: discretionary) - is forecasting that June sales will be flat to down 2%. That’s also why the department stores and specialty shops slumped in May
Here’s what I’m trying to figure out: Why did low-cost clothing stores like Aeropostaleand Children’s Place fare well while low-cost department stores like JC Penney’s and Kohl’s saw a dropoff in purchases? Is it simply that parents don’t cut back on their kids but they cut back on themselves? Or is this simply the result of a purchasing pattern that has teens/kids refreshing their wardrobes regularly while women don’t do it as much?
What do you think?
Anyhow, I’m on my way down to Bentonville, Arkansas to Wal-Mart’s annual shareholders meeting. I’ll keep you posted on any big news out of the world’s biggest retailer.
Apparently investors, press and workers are all in store to hear Carrie Underwood and Keith Urban perform tonight. The rumor is that Miley Cyrus and possibly Journey will be the surprise performers during the meeting tomorrow...stay tuned.
Questions? Comments? retaildetail@cnbc.com