Wal-Mart has played down the decline in same-store sales that it saw in the US during the second quarter and focused on increasing traffic and market share gains as signs of the health of its domestic business.
The world’s largest retailer revealed today (13 August) that comparable-store sales declined 1.5% at its US Wal-Mart outlets, falling short of the company’s guidance of flat to positive 3% comparable-store sales growth.
However, during a conference call with analysts, Eduardo Castro-Wright, vice chairman responsible for Wal-Mart US, insisted that the “underlying business remains strong” with “positive traffic” driving market share gains.
Castro-Wright attributed the shortfall in comparable-store sales to the “continuation of a challenging retail environment”.
“Consumers were more selective in discretionary spending during the second quarter than earlier this year,” he suggested.
Additionally, identical-store sales comparisons were impacted by food price deflation, which Castro-Wright admitted was sharper than expected. The fall in food prices affected comparisons by approximately 150 basis points, he said.
Finally, Castro-Wright said that the group had underestimated the positive impact that economic stimulus cheques had on sales in the second quarter of 2008.
According to CEO Mike Duke, Wal-Mart had succeeded in increasing traffic by 1.3% through effective communication of its value proposition.
“We effectively and frequently communicate our value proposition and we ensure that the customer experience is so good,” he explained.
Duke said that the company had seen an increase in purchases of own-label products and larger pack-sizes as consumers looked to cut spending, as well as an increased focus on promotional ads.