Walmart’s US Sales Remain Sluggish

COMPANY REPORTS INTERNATIONAL SALES CONTINUE TO GROW

FILE - In this Feb. 17, 2009 file photo, shoppers leave a Wal-Mart in Danvers, Mass.
FILE - In this Feb. 17, 2009 file photo, shoppers leave a Wal-Mart in Danvers, Mass.

— Sales remain sluggish at U.S. Walmart stores, but international growth helped the retailer post positive numbers.

The Bentonville-based retailer reported total net sales were $101.2 billion in fiscal 2011’s third quarter ending Oct. 31. U.S. sales dropped 0.1 percent to $62.2 billion while international sales continue growing and make up more than a quarter of Walmart’s sales.

“While we would have liked 3Q sales to have been higher, we’re encouraged by the quarterly sequential improvement in comp sales and customer traffic,” Bill Simon, president and CEO of Walmart U.S., stated in a prerecorded earnings call Tuesday.

Simon added despite positive signs, customer traffic decreased and the average ticket was slightly down compared to last year.

Same-store sales — based on sales in stores open for the previous 12 months — dropped for the sixth consecutive quarter, prompting Mike Duke, Walmart president and CEO, to look ahead.

“The U.S. team is taking the right steps to position our stores for the fourth quarter and for next year,” Duke said during the call. “Also, I really like our holiday preparations.”

Duke said financial uncertainty continues weighing heavily on everyday Americans, including many of Walmart’s core customers.

Simon said 68 percent of Walmart’s business comes from customers with household incomes less than $70,000 and the paycheck cycle remains pronounced, especially on the grocery side. The paycheck cycle refers to people putting off purchases until they are paid.

Retail consultant Carol Spieckerman, CEO of newmarketbuilders in Bentonville, said the U.S. sales numbers were not a surprise.

“I think some of the things they are doing now will pay off in 2011,” she said.

Spieckerman pointed to Walmart’s beauty offerings and the addition to the Hard Candy line.

“It’s a prestige brand. It’s edgy, cool and attracts a younger crowd,” she said. “I’m very excited Walmart is stepping out of the mold and customizing these individualized areas.”

Spieckerman said she is also encouraged about Walmart’s push in multichannel — integrating online and in-store functions — and online areas.

“If Walmart gets that right, it will be absolutely critical to their global growth,” she said.

Simon said walmart.com grew faster than the overall online market with sales particularly strong in electronics and home goods.

Sales in the entertainment segment, which includes electronics, were affected by sale price declines consistent with industry trends. Walmart showed growth in TV, home office and laptop sales, but music sales continue to decline.

Softline comparable sales, including apparel and home goods, were negative, but Simon said some areas outperformed expectations.

“Comp sales of plus size active wear increased double digit for the quarter,” he said, adding that sales of socks and underwear also were better than expected.

Food sales, which account for about 51 percent of U.S. sales, were strong, especially in fresh, snack and beverage categories. Produce and dairy were the strongest categories.

“We were able to streamline the supply chain process, which increased our speed to market and improved our quality and freshness,” Simon said.

Walmart added 98 supercenters in the third quarter including 71 store relocations and expansions. Simon said the retailer plans to open between 155 and 165 supercenters, with 45 to 50 being new units and the rest remodels, next year.

Walmart (NYSE: WMT) shares closed at $54.26 Tuesday, up 31 cents or 0.57 percent from Monday. Stocks traded between $47.77 and $56.27 during the past 52 weeks.

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