walmart shopper

The world’s largest retailer reported the eighth consecutive quarterly decline at its US stores.

Wal-Mart admits it has been struggling to persuade shoppers to buy much beyond the necessities, as rising food and gas bills hit the spending power of US consumers.  


“We’re simply not converting enough of our grocery customers to shop apparel,” William S. Simon, who runs Wal-Mart’s US division, said on a call with investors on Tuesday.

The world’s largest retailer reported the eighth consecutive quarterly decline at its US stores, where sales fell 1.1pc in the three months to the end of April. However, a robust performance from its international operations contributed to an overall rise in profits in the period of 3.8pc to $3.43bn (£2.11bn).

“The report was adequate at best,” said Brian Sozzi, an analyst at Wall Street Strategies, which provides research on US companies to investors.

Arkansas-based Wal-Mart is grappling with a customer base that remains financially squeezed in the US, as well as a large-store format some analysts say is falling out of favour.

“International remains the key growth driver for our company,” said Mike Duke, Wal-Mart’s chief executive. “Despite improvements in some areas of the economy, core US customers are still stretched.”

The retailer’s international sales jumped 11.5pc to $27.9bn in the quarter, with Mexico, China and China enjoying the fastest growth. Expansion in China, which accounted for $7.5bn of Wal-Mart’s $420bn of revenue last year, is being sped up.

However, the company this week threatened to abandon its plan to buy a controlling stake in South African supermarket chain Massmart should the government there force it to source more goods locally.

Back in the US, Wal-Mart said that although it was selling plenty of T-shirts and underwear, it was struggling to entice shoppers to buy clothes beyond that. Sales of electronic items were also lower in the quarter.

In an effort to arrest its decline in the US, Mr Duke is planning to open more smaller format shops known as Wal-Mart Express stores. Like rivals such as Target, it’s also trying to lift its online sales, though the company does not disclose how much revenue it generates from the web.

Wal-Mart shares were down almost 1pc at $55.54 in late afternoon trade in New York.

“The risk to reward ratio on Wal-Mart is constantly improving, despite the painful US experience over the last two years,” said Bernard Sosnick, an analyst at Gilford Securities.

Via Telegaph