Wal-Mart sales drop, but food remains strong - The Packer

Wal-Mart sales drop, but food remains strong

02/22/2011 01:23:40 PM
Bruce Blythe

Wal-Mart Stores Inc. reported its seventh consecutive quarterly sales decline for the U.S. as the company lost consumers to dollar stores, though food continued to generate positive results for the world’s biggest retailer.

Comparable U.S. store sales fell 1.8%, excluding gasoline, during the 13 weeks ended Jan. 28 compared with the same period a year earlier, according to a Feb. 22 Wal-Mart statement. The sales figure excludes Wal-Mart’s Sam’s Club stores.

In the statement, Mike Duke, Wal-Mart’s chief executive, said he was disappointed with the quarter’s sales, which fell short of a forecast the company released in November. Back then, Wal-Mart said it expected comparable-store sales for the quarter to range from a 1% decline to a 2% increase.

It will take some time to see positive comparable store sales, Duke said, according to the statement.

“Some of the pricing and merchandising issues in Wal-Mart ran deeper than we initially expected, and they require a response that will take time to see results,” Duke said. “There is no greater priority” than getting sales back into positive territory, he said.

Wal-Mart fared better in food, with U.S. sales posting “low single-digit” gains during the quarter, Bill Simon, chief executive of the retailer’s U.S. operations, said during a pre-recorded conference call.

“We believe the additional assortment we put into grocery increased our relevancy for customers,” Simon said, according to a transcript of the call.

Bentonville, Ark.-based Wal-Mart expanded fresh food departments in recent years, with aggressive discounts that drew customers away from traditional supermarket chains. In October, Wal-Mart said it planned to double its sales of locally grown fresh fruits and vegetables in the U.S. over the next five years as part of a broader effort to support sustainable agriculture worldwide.

Wal-Mart accounts for about a fifth of the U.S. retail food market and sold about $132 billion in groceries in the company’s fiscal 2010.

Despite sagging overall sales, Wal-Mart likely will continue its food expansion, though the retailer will have to keep prices low because of increased competition from Target and others, said Natalie Berg, Global Research Director for Planet Retail in London.

“In the U.S., there’s a number of alternative retailers looking to capitalize on fresh food,” Berg said. “Pricing is going to be more competitive.”


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