Walmart posts strongest U.S. comps in more than a decade
It’s really good to be Walmart. Yesterday, the world’s largest retailer announced that its same-store sales in the U.S. grew 4.5 percent the 13 weeks ending July 27, the strongest quarterly growth for the chain in more than 10 years. The retailer saw increases in customer traffic (+2.2 percent) and the average ticket (+2.3 percent) in its stores and online.
Walmart reported sales increases in the mid-single digits for grocery, with strength in fresh categories including bakery, meat and produce. Management said that customers responded well to investments the company has made in lowering prices and in its private label brands.
The chain’s general merchandise sales were strong, with seasonal categories including apparel and lawn & garden benefitting from warmer weather. Comps for electronics reached a four-year high as consumers responded well to an expanded assortment within the category.
Online sales at Walmart grew 40 percent during the quarter as the retailer continued to invest in expanding assortment (1,100 new brands added) while integrating its digital and physical operations. The chain now offers online grocery order pickup at 1,800 stores and expects to be able to make deliveries to about 40 percent of the U.S. population by the end of 2018.
The sole negative in Walmart’s quarterly report, a slip of 17 basis points in gross profit, is not being seen as a need for concern.
“Margins continue to reflect investments in price, people, stores and technology, though decreases were fairly well-contained, and market share continues to grow,” said Charlie O’Shea, lead retail analyst for Moody’s, in an email to RetailWire.
“The food business continues as a bright spot, with rapid rollout of in-store pickup well underway, and product delivery expanding as well,” Mr. O’Shea added. “Working capital continues to improve, and the company’s guidance indicates that it expects first half momentum to continue for the balance of the year.”
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DISCUSSION QUESTIONS: What is Walmart doing right that other retailers can emulate? Where do you see the greatest opportunities for the retailer to continue growing market share? Where do you see vulnerabilities?