Wal-Mart, Target issue tepid May sales views

Wal-Mart Stores Inc. reported a better-than-expected 3.2 per cent rise in last month sales at US stores, boosted by demand for basic items like groceries and medicine.

But the world's largest retailer gave a tepid outlook for this month as the economic situation gets more difficult and consumers try to stretch their dollars by purchasing cheaper cuts of meat or trading down to pasta.

"The economy continues to get tougher and the 'paycheck cycle' is more pronounced for customers than in past months," Eduardo Castro-Wright, head of Wal-Mart's US store division, said in a statement.

"As money gets tighter for them towards the end of the month, sales drop more than we have seen in the past." Smaller rival Target Corp, whose April sales at existing stores rose a less-than-expected 3.1 per cent, also gave a weak forecast for this month.

"We continue to see weakness in markets that are experiencing housing market-related stress, particularly in Florida, Arizona, Nevada and parts of California," Target said on a recorded call.