Wal-Mart has suggested its turnaround efforts in the US are gaining traction

Wal-Mart has suggested its turnaround efforts in the US are gaining traction

Wal-Mart Stores today (17 May) insisted that moves to beef up its product range in the US is "gaining traction" with consumers despite its comparable-store sales falling for the eighth quarter in a row.

The retailer reported a 1.1% comparable-store sales decline in the US for the first quarter of 2011, although comparable grocery sales were positive for the second quarter in a row.

President and CEO Mike Duke said today (17 May) that the "good news is that the plan [Wal-Mart US president and CEO] Bill Simon and his team are executing is gaining traction".

Wal-Mart has spent the last three quarters reversing a series of initiatives that led to the chain cutting the number of SKUs it offered by around 15% in 2009, which drove customers away as key items were not in stock. Last month, the retailer began an ad campaign to promote those reintroductions.

Simon said the retailer began its SKU add-back programme in the third quarter with dry grocery, and that comparable-store sales have risen in this department by 150 basis points from the fourth quarter.

"I believe that sales improvement supports our belief that we're on the right track," he said. Simon added that as the retailer adds more SKUs throughout all categories, it expects to gain further traction, improving both traffic and basket size.

Food is set to drive most of Wal-Mart's US growth in the short term, with Simon planning to open more Wal-Mart Neighborhood Market grocery stores on the back of their strong performance. 

Simon plans to open between 15-20 Neighbourhood Market stores to "capture growth in unapped markets".

He said the stores, which average around 40,000 square feet, reported an approximate 4% increase in comparable-store sales over the quarter, which was driven by almost 2% traffic growth over the period.

The retailer also said it plans to open "several" Wal-Mart Express stores as a pilot in both rural and urban areas, with a goal of having 15-20 stores by the end of the year. The new format stores, averaging 15,000 square feet, will offer fresh food, as well as key general merchandise categories. The stores will also include Wal-Mart's site to store programme so that customers can collect goods ordered through its website.

Simon said the Express pilots will be different so the retailer can decide which merchandise assortment is right for the commounity, with some outlets having a pharmacy.

"The goal is to get the model right, so that when we have the format, we'll roll it out and it will be successful," he said.