Wal-Mart Stores Inc said yesterday back-to-school merchandise was selling more slowly than expected, evidence that even the world's largest discount retailer is seeing more cautious consumers, Canada's National Post reported.

The company said yesterday its same-store sales were above targets for the first week of August, but added customers might be deferring clothing purchases due to sweltering temperatures.

Wal-Mart also said the softness was "consistent with the consumer trend of buying closer to 'the need'" - in other words, consumers might wait until late this month or early September to buy apparel and back-to-school goods.

John Winter, a retail consultant, said if Wal-Mart sees evidence of sluggish consumer spending, it does not leave much hope for the rest of the retail sector in the second half of the year.

"Wal-Mart is in so many communities, they sell so many necessities and they have such as huge market share, they are a barometer of how overall sales are doing.

However, they have higher sales per square foot than their competitors and they operate more efficiently."

Back-to-school sales are viewed as a good indicator of how fall and winter sales will play out, he said.

Wal-Mart said its same-store sales are on the high end of its plan for a four per cent to six per cent gain in August - still stronger than most other retailers.

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