Analyst: Wal-Mart shares could face steep selling on weak sales report

NEW YORK (AP) — The damper on this week's holiday shopping launch, Wal-Mart Stores Inc., could see its shares pummeled Monday amid signs that its decision not to discount as heavily this year curbed sales growth. But don't expect to see the sell-off spreading to the rest of the retail industry stocks, an analyst said.

That's because Wal-Mart has its "own unique set of circumstances," Richard D. Hastings, retail analyst at Bernard Sands LLC, said Sunday.

In an effort to defend its profits, the world's largest retailer did not discount as deeply on a wide array of products as it has in the past. That hurt sales the day after Thanksgiving, the official start of the holiday shopping season, as other competitors like Sears, Roebuck and Co. lured shoppers with deeper price cuts. Customers tend to be price-sensitive and go to Wal-Mart to take advantage of the blitz of deals.

The company said Saturday that November sales at stores opened at least a year would be up only 0.7 percent, instead of the previously projected 2 percent to 4 percent, based on disappointing sales for the seven days ended Friday.

Wal-Mart, based in Bentonville, Ark., and other retailers are expected to report November sales on Thursday.

"Wal-Mart is getting serious about profits, and they're not as obsessed about market share, which means they are getting careful about sales promotions and inventories — things that impact expenses and cash flow," Hastings said.

But with disappointing sales, investors face concerns that fourth-quarter profits at the world's largest retailer might be "a little challenged," he added.

Analysts polled by Thomson First Call expect 75 cents per share for the retailer's fourth quarter.

On Friday, shares of Wal-Mart closed at 55.32, down 18 cents, which is at the low end of its 52-week range of $50.50 to $61.31.