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Walmart posts mixed result

walmartUS retailer Walmart saw an increase of US$4.7 billion in total revenue during its second quarter, seeing a total of US$128 billion.

Comparable sales increased by 4.5 per cent, the strongest growth in more than 10 years, led by strong grocery, apparel and seasonal performance. Ticket and traffic growth exceeded 2 per cent, contributing to the growth of comparable sales.

“Thanks to the hard work of our associates, we had a great quarter with strong results and momentum across the business,” said Walmart president and CEO Doug McMillon.

“We’re continuing to aggressively roll out grocery pickup and delivery in the US, and we recently announced expanded omni-channel initiatives in China and Mexico. Customers have choices, and we’re making it easier for them to choose Walmart.”

Despite rising revenue, Walmart saw profits fall due to a US$4.5 billion loss from the sale of 80 per cent of Walmart Brazil, pushing the company into the red by US$861 million.

“Operating income fell by 3.7 per cent, a relatively weak outcome,” said GlobalRetail Data managing director Neil Saunders.

“Paradoxically, even if it looks bad, the net loss is forgivable as it is related to essential restructuring as Walmart moves its attention away from peripheral parts of its business.

“However, the decline in operating profit is more concerning as it reflects ongoing pressures from investing in lower prices, customer service, digital infrastructure, and store refurbishments, as well as increased labour and transportation costs. These pressures are unlikely to dissipate as the year progresses.”

Saunders noted that the company’s e-commerce offering was accelerating, with sales up 40 per cent this quarter, largely due to website improvements allowing customers to shop a wider assortment of goods faster.

“This is exactly the kind of result Walmart needs to achieve if it is to compete more effectively with Amazon,” said Saunders.

“Admittedly, all of these numbers have been delivered against the backdrop of a strong economy and a confident consumer. However, Walmart is taking share across a number of categories and is becoming a much more significant player in digital.”

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