Wal-Mart Projects Sales Increase for August

Wal-Mart Stores Inc., the world’s largest retailer, said its U.S. same-store sales for August will come in about 2.7% higher than a year earlier.

The company had forecast an increase of 1% to 3%. The Bentonville, Ark.-based retailer provided the preliminary sales figure in an announcement Saturday. A 2.7% gain would top Wal-Mart’s 2.4% increase in July.

Chief Executive H. Lee Scott has said that customers are struggling with higher fuel prices. Wal-Mart, where food outpaces general merchandise sales, may be losing shoppers to neighborhood supermarkets, said Dan Popowics of Fifth Third Asset Management.

“Their stores tend to be somewhat more remote,” said Popowics, who helps manage $22 billion in assets, including Wal-Mart shares. “There’s a cost in terms of a person’s time and perhaps fuel now to get there.”

In a report issued Friday, J.P. Morgan analyst Charles Grom predicted a 2.5% monthly gain. Wal-Mart reported a 3.3% increase in August 2005.

Wal-Mart is remodeling more than half its U.S. stores and adding new merchandise to entice shoppers who come in for groceries to purchase more profitable goods such as clothing.

In the last two months, the company has introduced a women’s sportswear collection by designer Mark Eisen for its George line and Exsto, a young men’s clothing line.

About two-thirds of the renovations will be complete by the end of October, Chief Financial Officer Tom Schoewe Aug. 15. Work will be suspended during the holiday shopping season and resume in January. The U.S. store changes “took a toll on sales and profits” in the second quarter, Oppenheimer & Co. analyst Bernard Sosnick wrote in an Aug. 15 report. Higher gasoline prices also curtailed spending by low-income shoppers, he said.

Sales at stores open at least a year rose 1.7% in the three months ended July 31, the smallest gain in six quarters. Same-store sales at Target Corp. grew 4.6% in that period.

The cost of a gallon of regular self-serve gasoline averaged $2.92 in the week ended Aug. 21, according to the Energy Department. That’s 12% higher than a year earlier.

Wal-Mart is expected to release detailed information about its monthly sales Thursday , as are other retailers. U.S. retailers’ August same-store sales are projected to be up 3%, the International Council of Shopping Centers said last week.