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Will Wal-Mart Sales Recover in the Fourth Quarter?

Wal-Mart's CEO expects sales to turn positive in the fourth quarter, but is this a pipe dream?



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CEO Mike Duke forecasts U.S. sales will turn positive in the fourth quarter. But just how likely is a sales recovery?

Duke gave his prediction during Wal-Mart's annual meeting taking place in Bentonville, Ark., on Wednesday. Duke said same-store sales are a "critical priority" for the company and he is confident in U.S. business plan.

So just how will Wal-Mart revive five consecutive quarters of declining sales? Well the answers weren't exactly revelatory.

Bill Simon, the new head of the U.S. division, laid the groundwork during his presentation at the annual meeting. The first order of business - restocking items removed amid Wal-Mart's Project Impact initiative. Limiting customer choices, which the company believed would boost profits, actually had a negative effect.

Wal-Mart is now in the process of bringing back merchandise and growing categories like apparel and home goods, two divisions it shrunk significantly amid the recession. The retailer will go back to providing apparel basics and offer more plus sizes.

The company is also bringing back "Action Alley," which is wide aisles filled with discount merchandise. This was another element eliminated amid its Project Impact initiative.

The discount giant is also hoping the holiday season will provide an added boost, though Simon warned shoppers will be more focused on essentials, especially for adults. For this reason, Wal-Mart is looking to sales of children's items, like toys, creating a specialized display called "Santa's gift shop" for the category and rolling out aggressive discounts on must-have merchandise.

Wal-Mart and Sam's Club will also carry


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iPad, which is expected to be on the top of shoppers wish-lists.

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Still, neither Duke nor Simon mentioned how much they expect sales to rise in the fourth quarter, and Simon noted that sales could be driven by easier comparisons in the fourth quarter last year.

Wal-Mart previously forecast third-quarter same-store sales in the range of a 2% decline to 1% uptick. This 1% rise now seems unlikely, after Duke's remarks.

Beyond 2010,

Wal-Mart said it plans to grow sales through the rollout of smaller-format stores

, which will allow it to enter untapped urban markets.

Given all of this, when do you think Wal-Mart's sales will turn positive? Take our poll below, and see the consensus of TheStreet.

--Written by Jeanine Poggi in New York.

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