Wal-Mart Stores Inc and Costco Wholesale Corp said June sales rose more than expected as shoppers facing soaring gasoline and food costs used federal tax rebates to buy discounted clothes and groceries.
Sales at stores open at least a year climbed 5.8 percent at Wal-Mart, ahead of its prediction of as much as 4 percent. The world's largest retailer said today that second-quarter profit would be higher than it previously forecast. Costco rose 9 percent, while analysts estimated an 8.1 percent gain.
Discounts of 65 percent on Ralph Lauren shirts at Macy's Inc and clearance sales at Limited Brands Inc's Victoria's Secret lured shoppers who received rebate checks last month.
With six straight months of job cuts by US employers and gasoline topping $4 a gallon, consumers are seeking bargains as they spend less on non-necessities.
"The clearance sales and the stimulus checks helped drive traffic to stores in June," David Abella, a portfolio manager at Rochdale Investment Management LLC in New York, said.
"The environment for spending is so weak that the stimulus checks can't overcome the economic factors."
June same-store sales probably increased 2 percent to 2.5 percent, bolstered by discounters and warehouse clubs, the International Council of Shopping Centers said on July 8.
Comparable-store sales are considered by some investors to be the best measure of results because they exclude the effect of location openings and closings in the past year.
Wal-Mart, based in Bentonville, Arkansas, had forecast an increase of 2 to 4 percent. Analysts, on average, estimated a 3.2 percent gain, according to Retail Metrics LLC.
Wal-Mart also increased its estimate for profit in the quarter through July to between 82 cents and 84 cents from a May projection of 78 cents to 81 cents.
Wal-Mart fell $1.44, or 2.4 percent, to $57.67 on Wednesday in New York Stock Exchange composite trading.
Before yesterday, the shares gained 21 percent this year, while the 29-member Standard & Poor's 500 Retailing Index fell 16 percent to the lowest since September 2003.
The US government issued $86.1 billion of tax-rebate checks through last week, part of a stimulus program to reinvigorate the slumping US economy. Almost all of the tax rebates will be sent out by the second week of July, Treasury spokesman Andrew DeSouza said on June 27.
Source:China Daily/Agencies
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