Wal-Mart Reports Sluggish Second Quarter Sales
Wal-Mart has reported sluggish figures for the second quarter, but has managed to post a slight prof…Wal-Mart has reported sluggish figures for the second quarter, but has managed to post a slight profit.
It had $120.1 billion in net sales in the second quarter, which is an increase of 2.8 per cent on the same quarter from the previous year. Net income was up slightly by 0.6 per cent to $4.1 billion.
However, comparable store sales were flat and traffic was negative for the seventh quarter in a row.
The retailer is doing better when it comes to e-commerce and smaller stores. Global e-commerce sales grew 24 per cent with strong growth in the US, UK, China and Brail.
Wal-Mart opened its Neighborhood Markets stores to attempt to compete with smaller scale grocery stores. The stores posted a 5.6 per cent increase in store sales and a 4.1 per cent increase in traffic, which suggests that they may be able to compete. Neighborhood Markets are around one-fifth the size of Supercenters and have much more accessible locations in urban areas. Wal-Mart has around 400 Neighborhood Markets and around 3,300 Supercenters in the US and plans to open more Neighborhood Markets in the near future.
As well as slow traffic at Supercenters, the results were also hurt by higher health care costs as a result of a bigger uptake in the employee health care scheme than expected.
The lacklustre overall performance led Wal-Mart to cut its full year 2015 profit outlook. It now expects earnings per share between $4.90 and $5.15, down from a range of $5.10 to $5.45.
Stephen Springham, Senior Retail Analyst at Planet Retail, commented, that although Wal-Mart has restructured the senior management team there has been, "little discernible change on the shop floor itself - as yet. And, somewhat depressingly, no change in underlying trading performance.
“But we do sense more subtle, evolutionary change in the business, be that through a series of Big Data initiatives or strategic bolt-on acquisitions to the e-commerce business. In this regard, it is probably misguided to overly fixate on the latest comp figures. Walmart is playing a long game, such that when comp growth does eventually return, it will prove sustainable.
“But the US competitive landscape isn’t getting any easier. Dollar store consolidation, an enlarged Walgreens and a potentially re-energised Target under new management will make for a much more challenging competitor set going forward."