Sales increase at Wal-Mart

Wal-Mart Stores Inc. said December sales at U.S. stores open at least a year rose about 1.6% from a year earlier, ending the holiday shopping season with its biggest increase since August.

The world’s largest retailer exceeded its forecast for growth of 1% or less during the five weeks that ended Friday. Bentonville, Ark.-based Wal-Mart provided the preliminary December figure in a recorded call Saturday.

Sales growth has slowed in recent months, hurt by store renovations and a push to add fashionable clothing at the expense of lower-cost items. Wal-Mart entered the holiday season reducing prices on toys, electronics and groceries in an effort to draw customers who increasingly were shopping elsewhere.

The retailer’s shares rose 17 cents to $46.18 on Friday. The stock fell 1.3% in 2006, compared with Target Corp.’s 3.8% gain.

Target said Dec. 18 that same-store sales, or results at locations open at least a year, would climb within its forecast range of 3.5% to 5.5%.

Minneapolis-based Target has outpaced Wal-Mart in same-store sales, considered a key measure of a retailer’s health, in 12 of the last 15 quarters. Target has lured shoppers with orderly stores and designer clothing and home goods, such as the Mod Baby bedding collections by Amy Coe.

Wal-Mart has emulated that strategy, upgrading electronics and clothing. The company plans to remove clutter and renovate dressing rooms at 1,800 U.S. stores by the middle of next year. The retailer had more than 3,900 locations, including almost 3,300 U.S. discount stores and Supercenters, as of Nov. 30.

The effort to bring in upscale merchandise is “very mixed so far,” David Abella, an analyst at Rochdale Investment Management in New York, said last week. “It remains to be seen if it will be successful.” He manages $2.2 billion in assets, including Wal-Mart shares.

Chief Executive H. Lee Scott Jr. said as much in October, when he told analysts that although adding higher-priced electronics had worked well, Wal-Mart overdid the move toward more fashionable clothing. The company is pulling the Metro 7 women’s clothing line, introduced in October 2005, from almost half of the 1,500 U.S. stores that carried it.

“Wal-Mart has got to fix their apparel problem,” Britt Beemer, chairman of Charleston, S.C.-based America’s Research Group, said last week. “Apparel is still their weakness. It’s the category that makes you the most amount of money.”

Same-store sales grew 0.5% in October and declined 0.1% in November, the company’s worst performance in more than 10 years.

Wal-Mart will provide final sales figures Thursday, when most major U.S. retailers will report December results.