Wal-Mart Sees Slowdown

Updated from 10:46 a.m. EST

Wal-Mart(WMT Quote) continued to limp through the Christmas shopping season Monday, issuing another warning about sales trending toward the weak side of guidance. Now analysts are starting to wonder if it's still a simple case of customer procrastination, or a more serious problem in which the working and nonworking poor have run out of money.

Wal-Mart said in a prerecorded call Monday that same-store sales growth from Nov. 20 through the week ended Dec. 12 is near the low end of its 3% to 5% range. The discount chain thinks customers are shopping "closer to need," or closer to the holidays, and noted that gift card sales are not included in its tally.

Most analysts were willing to buy the explanation and noted that many retailers are having trouble living up to the season's huge expectations, particularly with all the bad weather. But in an up market for blue-chip stocks, the news knocked Wal-Mart's shares down $1.11, or 2.1%, to $51.39, extending a slide that began at close to $60 in early November.

Todd Kuhrt, an analyst at FTN Midwest Research, thinks sales will improve next week, noting that procrastination has been the rule of each of the previous two years. "It's too early to throw in the towel for Christmas."

Kuhrt raised a more troubling possibility, however, saying it's possible the guidance reflects an inability of low-income customers to keep spending. "The proportion of the population that is still strapped with debt has not seen employment come back," said Kuhrt. "The lower-end demographic is hurting, and that clearly is hurting Wal-Mart."

He added: "I don't see a quick rebound the spending outlook for the middle-to low-income customers, so I would tend to be cautious regarding a spending pickup."

Wal-Mart said in its call that the strongest categories in the period were food, pharmacy, toys, infants, girls' apparel, and paint supplies. The Southeast and Mid-Atlantic regions were the strongest, the company said.