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Wal-Mart and Target: A tale of 2 discounters

November 16, 2012 • National News


FILE-In this Wednesday, Aug. 22, 2012, file photo, shoppers at a Target store in Chicago check the receipts of their purchases. Target’s third-quarter net income climbed 15 percent, helped by a gain related to the pending sale of its credit-card business. Heading into the critical holiday shopping season, the Minneapolis company’s outlook is well above analyst expectations. Target is optimistic about the period, which can make up 40 percent of a retailer’s annual revenue. The cheap-chic chain cites its new price matching program and a holiday collection partnership with luxury department store Neiman Marcus. (AP Photo/Sitthixay Ditthavong, File)

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 and issued an outlook for the fourth quarter — which encompasses the holiday shopping period __ that falls 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 spend in November and December, a period that’s traditionally the busiest shopping period of the year. Some merchants depend on the holiday shopping season for up to 40 percent of their annual sales, but economists watch the period closely to get a temperature reading on the overall mood of American consumers.

The forecasts seem to confirm a trend that has taken shape 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 even as the housing and stock markets rebound.

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