Wal-Mart Stores Inc. today reported its seventh consecutive quarterly sales decline for the U.S. as the company lost shoppers dollar stores, though food continued to generate positive results for the world’s biggest retailer.
Comparable U.S. store sales fell 1.8 percent, excluding gasoline, during the 13 weeks ended Jan. 28 compared with the same period a year earlier, Wal-Mart said in a statement. The sales figure excludes Wal-Mart’s Sam’s Club stores.
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 percent decline to a 2 percent increase.
It will take some time to see positive comparable store sales, Duke said in 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.
In recent years, Bentonville, Ark.-based Wal-Mart expanded offerings of meat, dairy products and other fresh foods, using aggressive discounts that drew customers away from traditional supermarket chains. 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.”
Keeping food prices low will be particularly important as Wal-Mart expands into large cities such as Chicago and Washington, D.C., Berg said.
Duke said Wal-Mart will continue to add Supercenters and will move forward “with even greater urgency” in opening small stores.
“I’m encouraged by the response we’re seeing in urban markets like Chicago, Washington, D.C., San Diego and New York,” Duke said, according to the transcript.
Dairy and meat prices rose during the previous quarter, and Wal-Mart expects inflation in fresh foods to continue.
“We continue to work with our suppliers to reduce inflationary pressure where possible and only pass on price increases when they cannot be avoided,” Simon said in the transcript.
Wal-Mart’s quarterly profit still rose 27 percent, helped by strong international sales.
During the three months ended Jan. 31, Wal-Mart’s fiscal 2011 fourth quarter, net income rose to $6.06 billion from $4.76 billion a year earlier. Total revenue rose 2.5 percent to $116.4 billion.