Wal-Mart officials report that the chain's Neighborhood Markets, such as this one, are performing well. In the first quarter, 13 new Neighborhood Markets opened in the U.S.Blaming everything from the weather to cuts in social programs, Wal-Mart executives reported a 5% drop in profits for their first quarter, which ended April 30.
However, Doug McMillon, president and chief executive officer, said he is excited about the progress of the corporation during his first full quarter at the helm with a net income of $3.58 billion. McMillon and other executives for the Bentonville, Ark.-based retailer discussed the quarter in a prerecorded presentation posted on the Web May 15.
As with several recent quarters, customer traffic at U.S. stores was down compared to the previous year. For 2014, U.S. stores saw 1.4% fewer customers compared to the first quarter of 2013. Wal-Mart officials blamed a long, hard winter and a late spring for part of the decline.
Also cited as a key factor for the performance of U.S. stores is the status of the Supplemental Nutrition Assistance Program, or food stamps, from which Congress cut $8.7 billion over 10 years. Despite that, Wal-Mart U.S. CEO Bill Simon said he is confident U.S. numbers will improve, especially with the opening of 13 new Neighborhood Market stores in the first quarter.
“In grocery, we’ve seen a trend improvement despite approximately 90 basis points of headwind from the reduction in SNAP benefits,” Simon said in the prerecorded presentation.
The presentation included little discussion of fresh produce, except for a mention from Rosalind Brewer, president and CEO of Sam’s Club.
“Within produce, hard freezes caused citrus availability issues, which were partially offset by strong strawberry and watermelon crops,” Brewer said in the prerecorded presentation.
One area of success that spanned virtually all segments of the retailer’s multinational operations was its efforts in the e-commerce arena.
Courtesy Wal-Mart Stores Inc.Doug McMillon“In the first quarter, we grew sales approximately 27%. We’re seeing double-digit sales growth from nearly all of our e-commerce and mobile commerce businesses around the world,” McMillon said in the presentation.
Both McMillon and Simon touted the “Wal-Mart to Go” grocery delivery and pick-up program.
“We’re encouraged by the early results of our Denver grocery delivery and pick-up test, which has multiple pick-up points across 34 stores,” Simon said in the presentation. “Early sales are beating expectations and have already exceeded those of our San Francisco-San Jose pilot, which rolled out in calendar year 2011.”
Simon said he believes there is potential for good returns on the Wal-Mart Express concept, too.
“We’re exploring tethering this format to our larger supercenters,” Simon said. “In this test, customers will be able to order supercenter merchandise at a rural Express store and receive it on the same day. On May 2, we opened the first fully tethered Wal-Mart Express store in North Carolina. Customers are buying products, such as bicycles and swimming pools, which they can’t traditionally get inside a 10,000-square foot box.”