Walmart Continues to Post Weak U.S. Sales

Walmart is fighting hard to re-establish its price leadership and volume with aggressive promotional efforts supporting grocery and holiday campaigns.

Overall, net sales for the third quarter increased 2.6% to $101.2 billion, driven by a sizable 9.3% gain at Walmart International. And income from continuing operations rose to $3.4 billion, from $.3.2 billion in the third quarter last year. But in the U.S., comp-store sales fell 1.3% — the sixth straight quarter of declining sales domestically. They report decreases stem from both less traffic and smaller transactions.

Walmart already releasing their Black Friday ad

We observed there were a lot more new shoppers with BMW’s and Audi’s dotting Walmart parking lots when the economy was at its worst. There was always the question as to what  kind of job Walmart would do keeping those shoppers when the economy leveled off. How would shoppers react to the Walmart shopping experience which is at best, inconsistent where new stores and remodels are a patchwork around the country?

Combine that with the increasing economic pressure on its core, lower-income shoppers (68% of Wal-Mart’s customers earn less than $70,000 per year), and you’ve got Walmart’s current dilemma.

Price Comparison and Guarantee Ad in Sunday FSI

Still, Walmart says the U.S. business is “on the right track…Walmart U.S. will be the price leader this holiday season, and I am confident about improving comp trends for the fourth quarter,” Mike Duke, president/CEO Wal-Mart Stores, said in the company’s earnings release. 

For the fourth quarter, the chain is now forecasting comp store sales results anywhere in the range of  -1% to a gain of 2%. “Like back-to-school and Halloween, we expect that a lot of the spending will come close to Christmas,” Bill Simon, president and CEO of Walmart U.S., offered on the earnings call.

He added that the company’s marketing message will continue to stress savings and we are seeing that in their promotional efforts. “Our holiday message is focused on basket savings. We believe that we have the right level of media buy for the fourth quarter. We also have increased our efficiencies through a program of digital, print and electronic buys. We have a number of aggressive programs underway to reach the customers often and early for the holidays.”

4 Page Circular in Selected Markets

Those steps include offering free shipping on 60,000 items from Walmart.com, for example, distributing both toy catalogs and their “Black Friday” ad featuring strong electronics pricing already and opening at midnight on Friday the 26th.

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~ by sjfrenda on November 17, 2010.

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