Wal-Mart discounts defy expectations
Wal-Mart Stores Inc's August sales exceeded analysts' estimates after discounts lured shoppers from department stores and malls facing what may be the worst back-to-school season in seven years.
August sales at stores open at least a year rose 3 percent at Wal-Mart, exceeding its forecast for a 1 percent to 2 percent gain, as purchases accelerated during the second half of the month. Same-store sales at Gap Inc, Nordstrom Inc. and Saks Inc fell.
Consumers headed to Wal-Mart and Costco Wholesale Corp to buy food and clothes for the start of the school year instead of JC Penney Co. and American Eagle Outfitters Inc. Retailers' use of discounts to drive purchases may lower profits as the holiday season approaches. "People are being smart shoppers, they are being savvy shoppers and are trying to get the most bang for their buck," Craig Johnson, an analyst at Customer Growth Partners LLC in New Canaan, Connecticut, said on Wednesday in an interview. "There's a flight to value away from the mid-tier department stores and mall-based retailers to discounters, warehouse clubs and Internet retailers."