Wal-Mart can't stop US sales decline
The company relied on overseas business for its first-quarter profit. With video.
The retail giant reported a solid first quarter Tuesday, beating analysts' expectations with a 3.8% gain in profit. But the store relied on strong overseas business to overcome a sales drop in the U.S. that has stretched for eight straight quarters.
Meanwhile, other retailers in the U.S., including dollar stores and Target (TGT), are eating away at Wal-Mart's market share here. Wal-Mart executives said American shoppers are running out of money faster than before.
Post continues after this video of one investor discussing Wal-Mart's flaws:
"Our core U.S. customers are stretched," Wal-Mart's chief executive, Mike Duke, said in a call discussing the first-quarter performance. "They are concerned about rising gas (and) food prices and employment issues."
Investors weren't all that pleased with Wal-Mart's earnings news. The stock dropped 1% in morning trading to $55.47.
Wal-Mart said it has noticed a change in shoppers' spending habits. People are foregoing clothes and home furnishings in favor of buying more groceries, detergent and other household goods.
You'd think the opposite would be occurring. Wal-Mart, which touts its everyday low prices, would seem like the natural place for shoppers to turn to in an economic downturn. And, as it turns out, the average amount of money a shopper spends there is up from a year ago.
The real problem is that Wal-Mart is losing shoppers, and store traffic is down. People don't want to buy the bundled four-pack of air fresheners, for example, even though they are a better deal per unit. Instead, they just want to buy a single can for even less money.
Shoppers have turned to dollar stores and grocery stores for many of those single-unit household items, including detergent and tissues.
So Wal-Mart is changing its strategy for these new-economy shoppers. It's going to open more of its grocery-only Neighborhood Markets, which are much smaller than the typical Wal-Mart. It will also open Walmart Express stores for groceries and some other items. It's also adding more of the items people are buying, like groceries and household goods, to its regular stores.
In the first-quarter, U.S. same-store sales slid 1.1%, which is about what the company expected. Analysts were expecting a 1.3% drop. Bad weather kept some shoppers away, and others simply bought groceries and skipped other items like clothing.
Wal-Mart's profit was $3.4 billion, or 98 cents a share, in the quarter. That was slightly better than a year ago, when the company reported $3.3 billion, or 87 cents a share, in profit. Analysts were looking for 95 cents a share.
Sales came in at $103.4 million, higher than the $102.9 billion analysts wanted to see. That gain was largely thanks to international sales, which jumped 11.5%.
For the current quarter, Wal-Mart said it expects profit at $1.05 to $1.10 a share, up from 97 cents in the year-ago period. Analysts are expecting $1.08.
And will it end its losing streak in the U.S.? Even Wal-Mart isn't sure, saying U.S. sales could be anywhere from down 1% to up 1%.
And if international operations are where the money is, Wal-Mart is jumping in even more. The company will open more stores in China faster than it had originally planned. "The best thing they have going for them is the international side of the business," a retail consultant told Bloomberg.
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Walmarts profits are down because people have taken their business elsewhere. The customer service at Walmart SUCKS!! The employees and managers are just rude as hell and if you ask anyone who works there for help, they will tell you flat out that they are busy, gove you an attitude or just tell you that it is not their job. If you ask for a manager, the manager will not even talk to you-they claim that they are too busy.
I have experienced this in Florida, Pennsylvania and New Jersey. Walmart stores Horrible customer service is on top of their poor quality products. In Super Walmart stores, the produce department sells rotten bug infested fruits and vegetables. Themeat department does not even sell "real" meat, I am not sure what they call it, but it looks and tastes NOTHING like meat. Just nasty!!!!
Products and Service at Walmart Suck!!!!!!!!!
Forget going to a Walmart in Philadelphia, PA, the only ones who work there are rude ignorant african americans who all dress in muslim gear. They will not even help you unless you are "ghetto african american" too. I am talking about the Columus/Delaware Avenue location in South Philadelphia. The health department needs to close that store down too.
I refuse to shop at Walmart because they refuse to support the USA. Just try to find ANYTHING in that store that wasn't made on foreign soil.
So to me I'd rather shop at a store that will give me good customer service, and good prices than one that has rude employees and some kind of sick fixation with moving it's products from one self to the other every month or so.
lousy stores + crappy service + cheap chinese junk = Walmart
I avoid our local Wal-Mart because of the inconsistent customer service in the checkout lanes, as well as the crowded aisles. I also dislike walking 2 miles to buy a bottle of shampoo and a gallon of milk. It is much easier to hit the neighborhood Dollar General and be in and out in less than 5 minutes for about the same price. Wal-Mart may have it right by reducing the "super" and making their stores more user-friendly.
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