Wal-Mart’s Poor August

Stocks: (WMT)(TGT)

According to a number of media reports, Wal-Mart’s same store sales for the US were up 2.7% over the same month last year. News accounts made a great deal of the fact that the number was at the high end of Wal-Mart’s prediction of 1% to 3% growth. The news is still a bit like a person who is 50 pounds underweight saying that they had gained five pounds.

Wal-Mart’s same store sales in August of 2005 were up 3.5%. And US revenue for the quarter ending July 31 was up only 6.9% from the year before.

As MarketWatch pointed out over the weekend, Wal-Mart’s rival, Target, said its same store sales should rise 2% to 4% in August. If Target hits the high end of that, it is probably taking some market share from Wal-Mart. Nonetheless, Target’s same store figure in August a year ago was 6.3%.

Wal-Mart’s stock may rise on the news. But, it really shouldn’t. The fact that the clouds are not quite as dark as feared does not mean it will be a sunny day.

Douglas A. McIntyre can be reached at douglasamcintyre@gmail.com. He does not own shares in companies that he writes about.