Walmart expects to end three-year sales slump

After nine consecutive quarters of declining sales, Walmart Stores says it expects the trend to end when domestic earnings are disclosed next month.

Executives for the world’s largest retailer told analysts yesterday that comparable store sales in U.S. Walmart stores have been positive for the past three months. The company also disclosed that it plans to increase store openings next year to between 210 and 235, up from 142 to 150 this year.

The three-year slump in sales was unusual for the company that has seen unprecedented growth the past quarter-century. Indeed, the sales slump forced company executives to re-examine many strategies and tactics.

In advance of Wednesday’s meeting with Walmart executives, several investment analysts met with current and former Wal-Mart employees who described their assessment of the company’s problems. According to a report on that meeting released by the employees, they believe that Wal-Mart’s low-cost approach has created a “vicious cycle” that resulted in declining sales.

“Walmart is facing significant challenges as competitors are squeezing the company from all sides and same-store sales in the U.S. are down year-over-year,” the statement said. “Management’s single-minded focus on cost cutting has led to pervasive understaffing. This short-handedness, combined with the computerized management initiatives imposed by the Walmart home office, in turn leads to many long lines at the register and bare shelves as restocking lags. The shopping experience deteriorates for many customers, leading some not to return. That translates into lost sales, further increasing pressure to keep costs down and the cycle repeats again.”

Among the specific observations made by the employees:

• “Lower staffing levels implemented during inventory rationalization efforts, such as the ‘Win, Play, Show’ (WPS) initiative, remain even after the company abandoned WPS and added back SKUs to the assortment. This is leaving many stores dramatically understaffed, with many over-burdened employees unable to move inventory out of the supply room onto the sales floor. Even when inventory does make it onto store shelves, some employees are forced to cut corners at cash registers, undermining the company's point of sale data.”

• “Training is virtually non-existent for many new associates, because many of them don’t have time to learn the company’s systems while completing their assigned tasks in the time required by the company’s computer systems.”

Despite the criticism from the employees and former employees, Walmart executives painted a positive picture of the company’s future to investment analysts. Bill Simon, Walmart company president, says he sees an opportunity for “hundreds of billions” of dollars in U.S. growth.

In addition to its large Supercenter stores, Walmart plans to open up to 100 small and medium-sized stores to add market penetration. Roughly 80 of those stores will be midsized Walmart Market supermarket stores, and about 20 will be the newest Walmart format, a convenience-store-sized Walmart Express.

Walmart executives also said they are working to improve the profitability of overseas operations, especially in markets such as Brazil and China, by cutting expenses and reducing sales specials in favor of Walmart’s traditional “every day low prices” philosophy.

 

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I HAVE WORKED AT WAL MART FOR ALMOST 20 YEARS AND HAVE SEEN MANY CHANGES. SOME FOR THE GOOD, BUT MOST ARE FOR THE BAD. SINCE THEY HAVE JOINED MANY DEPARTMENTS TOGETHER, THIS IS WHEN WAL MART TOOK A TURN FOR THE WORSE. I USE TO BE A DEPARTMENT MANAGER BUT AFTER 19 YEARS I STEPPED DOWN AND BECAME AN OVERNIGHT MOD PEOPLE. LESS WORK TO DO AND ALOT BETTER PAY BECAUSE IT IS OVERNIGHT. THE DEPARTMENT MANAGERS HAVE TOO MANY DEPARTMENTS TO MANAGE AND NOT ENOUGH HELP OR TIME TO DO IT IN. WAL MART NEEDS TO GO BACK TO THE WAY SAM WALTON HAD IT WHEN HE WAS ALIVE. THE ASSOCIATES AND THEIR FAMILY MENT SOMETHING TO WAL MART AND THE CUSTOMERS WERE ALWAYS NUMBER ONE. NOW ALL WAL MART CARES ABOUT IS THE BOTTOM LINE AND WORKING THEIR ASSOCIATES TO DEATH WITH CRUMBY PAY AND THEY CONTINUE TO DO AWAY WITH ALOT OF THE BENEFITS THAT THEY USE TO OFFER. JUST SO THEY CAN SAVE THEM SOME MONEY. ASSOCIATES AND THEIR FAMILIES NO LONGER MATTER TO WAL MART. JUST THE BOTTOM LINE DOES.