Wobbly Wal-Mart Trips Again

Fashion-minded shoppers who found a discount haven at Target (TGT Quote) have little interest in shopping at Wal-Mart (WMT Quote), judging from the October sales report issued by the world's largest retailer over the weekend.

Wal-Mart estimated that its monthly same-store sales growth, tracking sales at stores that have been open for at least a year, slowed to 0.5% in October. The discount giant had previously predicted a much larger increase of 2% to 4%, and its shares recently were down $1.17, or 2.3%, to $49.56.

The S&P Retail Index, meanwhile, fell just 0.2%. While Wal-Mart is often seen as an indicator of consumer spending strength, many of the retailer's issues seem to be company-specific.

Wal-Mart's latest shortfall comes after a series of sales misses. The company struggles to shed its bargain-basement image and attract higher-scale customers like those who gave Target its tongue-in-cheek nickname, Tar-Zhay. Wal-Mart has launched a large-scale store remodel, and it has packed its apparel shelves with more private-label and fashion-oriented clothes in an effort to remake its dowdy image.

But the store remodels are hurting traffic, and the new apparel offerings haven't been well-received, says Ken Perkins, president of the research firm Retail Metrics.

"They're trying to follow Target upscale and broaden their appeal," Perkins says. "It's a much bigger leap for Wal-Mart to do that, given the widespread perception that it's the rock-bottom retailer. Wal-Mart and fashion are not concepts that go together in most people's minds."