Wal-Mart Same-Store Sales Fall

Elena
27 Nov, 2006
New York City

U.S. stock market futures declined on Monday on concerns about a weak retail environment after a disappointing sales forecast from Wal-Mart Stores Inc. Shares of the world''s biggest retailer dropped 0.7% before the bell, as November same-store sales fell 0.1%. Shares of discount retailer Target fell 2.5%, while department stores J.C. Penney and Sears Holdings slipped about 1.5%.

[R]9:00AM Stock futures declined on lower Wal-Mart same-store sales and higher oil.[/R]
U.S. stock market futures declined on Monday on concerns about a weak retail environment after a disappointing sales forecast from Wal-Mart Stores Inc ((WMT)). Shares of the world's biggest retailer dropped 0.7% before the bell, as November same-store sales fell 0.1%. Consequently, shares of discount retailer Target ((TGT)) fell 2.5%, while department stores J.C. Penney ((JCP)) and Sears Holdings ((SHLD)) slipped about 1.5%. Retailers will be in the spotlight as early reports show 6% higher retail sales on Black Friday, almost $9 billion more than last year.

An increase in crude oil prices also generated negative mood. Crude oil gained 1% crossing $60 a barrel before retreating to $59.65. Commodity prices rose as the dollar continued to suffer considerable weakness against the euro. However, the greenback gained some ground against the yen. The U.S. currency slipped amid comments from China that it sees risks for its dollar holdings as well as slowing U.S. economic growth. Standard & Poor's 500 futures were down 2 points, slightly below fair value. Dow Jones industrial average futures were down 15 points, and Nasdaq 100 futures were down 4.75 points.

[R]8:30AM Wal-Mart is planning to open stores in India.[/R]
U.S. retail giant Wal-Mart ((WMT)) is planning to open stores in India. Although India does not allow foreign companies to open multi-product retail stores, they can still make wholesale purchases to support their global supply chains. It would take several months before the first of the stores opened their doors.

Wal-Mart tied up with India''s business conglomerate Bharti Enterprises Ltd. to set up hundreds of stores across the country, the CEO of the Indian company said Monday. However, he refused to reveal the financial terms of the deal, except for telling reporters that a memorandum of understanding for a joint venture and a franchise agreement had been signed.

India''s booming retail market, estimated at more than US$200 billion (euro160 billion), is currently dominated by more than 12 million mom-and-pop shops. Sales through company-owned network stores currently totals about US$8 billion (euro6.4 billion), or less than 5 percent of the market. An increase in demand for branded products, however, makes India a compelling destination for global retail companies. The company is expected to source products worth nearly US$2 billion (euro1.6 billion) from India for Wal-Mart stores worldwide this year.

On Saturday Wal-Mart Stores said that U.S. same-store sales in November fell 0.1% from a year ago, the first monthly same-store sales drop since 1996.


[R]7:30AM Asia ends mostly higher on Monday, Japans leads the way.[/R]
Asian markets ended mostly higher on Monday. Japanese stocks closed higher, led by banks, retailers and other shares sensitive to domestic demand. The Nikkei index rose 150.78 points, or about 1%, to finish at 15885.38 points. Mizuho Financial Group rose 1.9%, Mitsubishi Motors increased 1% and supermarket operator Aeon ended up 2.5%.Tosoh Corp. jumped 5.6% after reporting it had developed an alternative low-cost material used in the production of liquid crystal display panels. In the energy sector, Inpex rose 1.8%.

In Hong Kong, shares slipped as traders sold bank stocks. Property issues rose on expectation of strong results from land auctions. The Hang Seng Index fell 56.29 points, or 0.3%, to 19204.01. Cheung Kong, property company, rose 1.3% while its rival Sun Hung Kai rose 1.6% ahead of a Hong Kong government land auction Tuesday that is expected to fetch high prices. Bank of China fell 3.3% while ICBC fell 2.9%. Bank of East Asia dropped 1.6% and airline Cathay Pacific declined 1.5%.

Taiwan shares hit a six-year high as chip stocks gained on news of the likely buyout of the island''s largest chip-packaging firm, Advanced Semiconductor Engineering. The Weighted Price Index of the Taiwan Stock Exchange rose 70.79 points, or 1%, to close at 7498.15.

Australian shares inched down in slow trading, as investors waited for direction from offshore markets after the U.S. Thanksgiving holiday. The benchmark S&P/ASX 200 index declined 1.4 points to 5452.20.

South Korean shares advanced, led by Kookmin Bank, which rebounded from last week losses, while exporters dropped on the South Korean won continued rise. The Korea Composite Stock Price Index, or Kospi, climbed 3.4 points, or 0.2%, to 1425.13.

[R]6:30AM European markets were lower in early trading on Monday on weak dollar.[/R]
European markets were lower in early trading on Monday. The U.K. FTSE 100 index lost 0.04% at 6,119.80, while the German Xetra Dax traded 19 points or 0.2% lower at 6,392.96 and the French CAC 40 lost 15 points or 0.3% at 5,374.4.

Advancers

Pharmaceutical and chemical firm Bayer rose 2.2% after it produced a third-quarter net profit that exceeded analyst forecasts and also raised its fiscal-year guidance for its healthcare operations.

Miners Rio Tinto and BHP Billiton saw their shares rise more than 0.7%, while shares in oil companies BP tacked on around 0.3% each. U.K. home builders were also in the news as consolidation hopes surged in the sector. Shares in Wilson Bowden rose 13.1% in early trading after the company confirmed that its in talks with a number of potential bidders. Dassault shares rose 0.8%, albeit with just 48 shares traded.

Decliners

Automakers were hit as the US dollar plunged against the euro. DaimlerChrysler fell 1.5% while BMW fell 1.7% to and Fiat fell 1%. BAE Systems dropped 2.5% in London after the Telegraph newspaper reported that the Saudi Arabia government may transfer a fighter jet deal from BAE Systems to Dassault Aviation of France. Oil services company Technip was down 3% after Eni of Italy said late Friday that it was not planning to bid for the company.

Oil and gold

Oil prices advanced Monday as the market opened after the long Thanksgiving weekend, but stayed within the range of the last eight weeks with little geopolitical or weather news to drive prices. Light sweet crude oil for January delivery rose 31 cents to $59.55 a barrel in electronic trading on the NYME.

Gold opened higher on Monday at $638.00 an ounce, up $4.20 an ounce from the close of $633.80 on Friday.

Currencies

The euro edged lower against the dollar on Monday following a steep climb last week, but remained above $1.31. The euro bought $1.3112 in morning European trading, down from the $1.3167 it bought over the weekend. The British pound declined to $1.9355 from $1.9463, while the dollar rose to 116.12 Japanese yen from 115.55 yen.