Wal-Mart yesterday (2 November) posted a disappointing US sales performance for the four-weeks ended 27 October, leading to speculation that a price war to grab holiday trade is on the horizon.
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Wal-Mart Stores in the US reported sales of US$16,583bn during the month, up 7.7% from $15,397bn reported during October 2005. Sam’s Club stores generated revenues of $3110bn, up from $3,073bn. Internationally, sales increased a massive 32.1% up to $6,017bn from $4,554bn the previous year.
The company attributed the international net sales increase to the consolidation of Seiyu and Wal-Mart Central America and the acquisition of 139 units in southern Brazil.
However, the US performance has been viewed as less pleasing. Wal-Mart said that it was continuing to see the negative impact on same store sales of hurricane Katrina and the expensive remodelling programme.
“The US Wal-Mart stores that were not impacted by the 2005 hurricanes had comps of approximately 1.7% in October,” said Tom Schoewe, Wal-Mart Stores executive vice president and chief financial officer. “Last year, we saw a positive impact on comps from customers who restocked their homes after the hurricanes and this continued through the end of the fiscal year. The impact on comps from hurricanes will continue, but will soften somewhat during the next three months.
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By GlobalData“Our remodeling efforts in the Wal-Mart Stores division wrap up during the next two weeks to ensure there is no disruption for our customers during the holiday shopping period,” choewe explained. “Remodeling activities will begin again in late January and will continue into the next fiscal year.”
Trends for the company’s October sales were similar to September, with food and consumables outpacing general merchandise in sales growth.
“As in September, apparel sales, particularly in women’s apparel, were softer than expected,” Schoewe said. “We’re continuing to work longer term to improve the balance between fashion and core essentials in our stores. Short-term, we’re working to maximise holiday opportunities by focusing on leveraging inventory.”
Schoewe emphasised the Wal-Mart’s aggressive ‘rollback’ advertising and marketing programmes, which are expected to reinforce Wal-Mart’s price leadership position, sparking suggestions that a price war is looming in the build-up to Christmas.
“Price rollbacks on key toys that went into effect in mid-October generated significant lift in unit volume,” Schoewe commented. “In electronics, another dynamic category for the holiday season, we have several initiatives planned to drive holiday sales. We have expanded our brand offerings, improved our product presentations in the store, reinforced our value pricing and doubled the assortment of accessories.”
