Wal-Mart sales disappointing as consumers tighten belts

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The Independent Online

Wal-Mart, the largest retailer in the world, yesterday said sales had been hit because its army of low- and middle-income customers were having to pay more to put petrol in their cars.

Wal-Mart, the largest retailer in the world, yesterday said sales had been hit because its army of low- and middle-income customers were having to pay more to put petrol in their cars.

The superstore, which is mainly based in out-of-town sites, reported that like-for-like sales were up only 0.5 per cent in August compared with last year. Wal-Mart also warned that its third-quarter performance would be sluggish.

The company said the market for selling school clothes and equipment ahead of the new term - the second most important period of the year for US retailers after Christmas - has been unusually tepid.

The market was braced for disappointing sales from Wal-Mart after the company last week warned that sales were not racing ahead at the pace Wall Street has come to expect.

The Arkansas-based retailer had lowered its sales expectations to a range of 0 to 2 per cent from the same period last year. Before then, its forecast was a 2 per cent to 4 per cent gain.

Some analysts believe Wal-Mart's problems are more long term. A number of areas in the US have resisted the company's attempts to open its stores because of its often debilitating impact on local competitors.

The company is also searching for sources of growth. One option would be for it to move away from its business model as an out-of-town retailer by opening stores in urban areas.

However, some analysts do not believe it would attract sufficient revenues to justify the higher overheads.

Wal-Mart stressed it had been hit by a number of specific problems. The company, which accounts for nearly 10 per cent of US retail sales excluding cars, has repeated in recent weeks that its consumers are tightening their belts.

It also has blamed Hurricane Charley, which hit Florida last month and forced it to shut 75 stores. The storm also affected operations at 200 other stores.

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