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Clean Sweep in Aisle Three: Wal-Mart Sales Exceed Expectations

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Bentonville's finest continues to outperform battered retail sector.

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Wal-Mart's (WMT) February sales exceeded analysts' estimates as consumers hunted for bargains in the deepening recession.

But other major retailers reported sharp declines. Luxury goods and department stores were especially hard hit.

Wal-Mart said February's same-store sales, or sales at stores open a year or more, rose 5.1%, beating analysts' consensus estimate of a 2.4% increase.

Buyers scooped up groceries and personal care products. The world's largest retailer said housewares and entertainment products also sold well, suggesting more people are preparing meals at home and reducing trips to the movie theater. The sales figures exclude gasoline.

Meanwhile, rival Target (TGT) said same-store sales fell 4.1%, lower than the 4.8% drop analysts expected, underscoring Wal-Mart's marketing savvy and muscle.

Costco (COST), the nation's largest operator of membership warehouse stores, said February same-stores sales increased 4%. Sales at Wal-Mart's Sam's Club, the number 2 chain in the sector, were up 5.9%. Sales at BJ's (BJ), which is number 3 in the sector, rose 8.2%. The common theme: Bargains.

The few bright spots in retail sales probably aren't the first signs of a turnaround. The US Labor Department says the number of new jobless claims and the number of people receiving unemployment benefits dropped last week, but analysts expect forthcoming employment data will show joblessness climbed to 7.9% in February from 7.6% in January.

Rising unemployment suggests more bad news ahead. The Conference Board's consumer confidence level -- a survey of 5,000 households -- fell to 25 in February from 37.4 in January, the lowest level since data collection began in 1967.

Look for more retail sales reports like this: Macy's (M) said same-store sales declined 8.5% and J.C. Penny (JCP) reported an 8.8% decline.

Not surprisingly, luxury stores have been among the hardest hit as the market for $5000 purses and expensive clothing evaporates. Nordstrom (JWN) said February sales fell 15.4%. Saks (SKS) said same-store sales were off 26% in February.

Surprisingly, the recession is taking a bite out of hanky-panky. Limited Brands (LTD), operator of Victoria's Secret and Bath and Body Works, reported a 7% drop in sales.
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