Wal-Mart's November Not So Jolly

Nov. 30, 2006 — -- If you're the world's largest retailer, the holiday buying season should be one of the most wonderful times of the year as shoppers open their wallets in search of a little cheer.

But sometimes a grinch and a little trouble in the clothing aisle can increase the number of empty shopping carts at your stores.

Wal-Mart, the world's largest retailer, posted a 0.1 percent decline in same-store sales during November.

This is the first time the company has posted a down month in more than a decade and it comes at a crucial time that has some investors worried that Wal-Mart has lost its touch with customers.

"I do think they've lost their way on some parts of the store," said Christine Augustine, a retail analyst with Bear Stearns. "And I think they'll get it back, but it's going to take time."

In it's monthly sales report to investors, the company pointed out some of its problem areas: apparel and home furnishings. Wal-Mart decided it could grab some of the more fashion-conscious customers from competitor Target by offering more than basics in both of these areas. But sales in both have yet to gain traction.

One Wal-Mart shopper talked with ABC's Betsy Stark today. "What do you think about the fashion at Wal-Mart?" asked Stark. The customer responded: "The fashion? I don't go there."

Add to that a difficult comparison from a year ago, when residents along the Gulf Coast were spending billions to replace home goods and basics lost to the hurricanes, and it makes for a tough month to post growth.

According to data from the International Council of Shopping Centers, Wal-Mart's down month zapped almost half the November growth in the retail sector. According to the group's figures, sales were up 2.1 percent during November at chain stores open at least one year. Last year, the ICSC's retail growth index came in at 3.8 percent during November.

Wal-Mart says it will increase advertising during December and cut prices on holiday and gift items to drive traffic up. They are predicting that the final month of the year will be flat or slightly up when compared to last year.