Wal-Mart's Same-Store Sales Grew 4.8% in September

Updated from 1:56 p.m. EDT

Wal-Mart, (WMT) the nation's largest retailer, said Monday that its same-store sales grew 4.8% in September and announced it would speed up plans to open more than 300 stores in the U.S. and overseas next year.

The Bentonville, Ark.-based retailer reported overall sales of about $17.3 billion for the five-week period ending Sept. 29, up 10.5% from the same period a year ago. Sales at Sam's Club, Wal-Mart's warehouse division, were about $2.47 billion for the same five-week period, up 9.8% from the previous year.

Though overall sales growth in both the discount chain and Sam's Club stores were up for the month, comparable, or same-store, sales growth slowed compared to the year-earlier periods. The 4.8% growth, which came during the five-week period that ended Sept. 29, was down from 7.2% growth during the same period a year earlier. For the first 35 weeks of the year, the company's comparable sales were up 6.1%, compared to an 8.2% increase for the same period in 1999.

Wal-Mart warned investors last week that same-store sales growth at its main discount chain would be at the low end of expectations for September, though sales at Sam's Club, Wal-Mart's warehouse division, were above plan.

Indeed, Sam's Club same-store sales growth was 7% in September, compared to 5.8% during the same month a year ago. However, Sam's Club same-store sales growth for the first 35 weeks of the year was at 5.9%, compared to 7% for the same period a year ago.

Expansion Plans

Wal-Mart also announced Monday that its Sam's Club division will add between 40 and 50 new locations in the upcoming fiscal year, which begins Feb. 1, 2001. Half of the new stores will be relocations or expansions of existing clubs. About 100 of the existing Sam's Club stores will also be remodeled next year.

Wal-Mart also plans to open between 100 and 110 of its trademark stores in existing overseas markets, including new stores and relocations of existing stores. The plan includes several restaurants, department stores, and supermarkets in Mexico. The retailer will continue remodeling the hypermarket locations it acquired in Germany.

Wal-Mart also plans to open about 40 new discount stores and up to 180 new Supercenters next year, with relocations or expansions of existing discount stores accounting for up to 110 of them. The rest will be built in new regions. In addition, the retail giant will add up to 20 more of its mid-sized "Neighborhood Market" stores in the U.S.

In a statement, Wal-Mart's President and Chief Executive Lee Scott said the expansion plans will result in about 40 million square feet of new retail space -- the largest increase in terms of square feet in the company's history. Wal-Mart will also build seven new distribution centers, adding about 7 million more square feet in distribution space.

The company currently operates 1,742 Wal-Mart stores, 835 Supercenters, 469 Sam's Clubs and 13 Neighborhood markets throughout the country, as well as more than 1,000 additional stores around the world.

Jeffrey Feiner, an analyst at Lehman Brothers, said the acceleration of Wal-Mart's plan to expand its Supercenter and Neighborhood store locations reaffirms the retailer's "dramatic success" in penetrating the retail/food industry, and predicted the stores would be the key generator of Wal-Mart's overall earnings growth in the next three to four years.

Nearly half of Wal-Mart's incremental earnings are now coming from the Supercenter division, according to Feiner.

Feiner said he viewed both Wal-Mart's accelerated expansion plans and its September sales figures as very positive announcements. He has a "buy" rating on Wal-Mart shares, with a $70 target price. His firm does not have an underwriting relationship with the retailer.

Shares of Wal-Mart finished Monday regular trading down $1.88, or 4%, at $46.25.

The stock has been trading in the lower-end of its 52-week range for the past few months. It set a 52-week low of about $43.44 in February, bounced back to trade above $60 in July, but has since slipped again.

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