By Anne D’Innocenzio
AP Retail Writer
NEW YORK (AP) — This holiday season, the biggest discount chains in the U.S. will tell the tale of two very different shoppers: those that have and those that have not.
Wal-Mart Stores Inc., the world’s largest retailer, on Thursday acknowledged that its low-income shoppers continue to struggle in the economy when it issued an outlook for the fourth quarter — which encompasses the holiday shopping period — that fell below Wall Street estimates. On the same day, its smaller rival Target Corp., which caters to more affluent shoppers, said it expects results during the quarter to exceed the Street’s projections.
The two discounters offer valuable insight into how Americans will be spending in November and December, a period that’s traditionally the busiest shopping period of the year. Some merchants depend on that time of year for up to 40 percent of their sales, but economists watch it to get a temperature reading on the mood of the American.
Wal-Mart and Target’s forecasts seem to solidify a trend that has been taking shape over the last several years during the economic downturn. Well-heeled shoppers spend more freely as the economy begins to show new signs of life, while consumers in the lower-income brackets continue to hold tight to their purse strings for discretionary purchases even as the housing and stock markets continue to rebound.
Indeed, while both Wal-Mart and Target are discounters, they cater to different customers. Wal-Mart, which says its customers’ average household income ranges from $30,000 to $60,000, hammers its low-price message and focuses on stocking basics like tee shirts and underwear along with household goods. Meanwhile, Target, whose customers have a median household income of $64,000 a year, is known for carrying discounted designer clothes and home decor under the same roof as detergent and dishwashing liquid.
Even the tone the retailers struck on Thursday was different. Charles Holley, Wal-Mart’s chief financial officer, told reporters during a call on that the retailer’s consumers are still worried about high unemployment and higher basic costs like gas. He said he worries that they also have some anxiety over big tax increases and spending cuts — known as the “fiscal cliff” — that will take effect in January unless Congress and the White House reach a budget deal by then.
“Macroeconomic conditions continue to pressure our customers,” Holley said.
Meanwhile, Gregg Steinhafel, chairman and president of Target, told investors: “We feel good about our ability to deliver inspiring merchandise, most-wanted gifts, and unbeatable value, while also generating expected profitability.”
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