During a second-quarter earnings discussion, Walmart U.S. president/CEO Greg Foran said the shift from traditional post-paid wireless plans, combined with “ongoing industry declines,” drove tech comps lower for the three months ended July 31.
But the downturn was mitigated, he said, by better in-stocks and stronger online sales.
Walmart has been slogging through consecutive quarters of weak CE comps, but is implementing new initiatives, including some basic blocking-and-tackling fixes, under recently named CE chief Greg Hall, the discounter’s fourth tech head in as many years.
“It’s a struggling business but a lot of the wounds were self-inflicted,” Walmart chief merchant Andy Barron told TWICE earlier this season.
The story was similar at Sam’s Club, where president/CEO Roz Brewer reported improving, but still negative CE comps. Gains across certain key categories including tablets were offset in part by the warehouse club’s wireless business, which was also “negatively impacted by the industry shift to installment plans,” she said.
Total Sam’s Club sales slipped 0.9 percent to $14.7 billion and total comps rose 1.3 percent, both excluding fuel.
At Walmart U.S., net sales rose 4.8 percent to $74 billion, and total comps increased 1.5 percent — the fourth consecutive quarter of positive comps, thanks to lower gas prices, increased e-commerce traction, and better-staffed and stocked stores.
But the investment in labor, plus increased shrink and lower pharmacy reimbursements, took a toll on operating income, which fell 8.2 percent year over year.
This drove an 11.4 decline in net income for parent company Wal-Mart Stores, to $3.5 billion for the quarter, while net sales were essentially flat at $120.2 billion.
On the e-commerce front, global sales grew about 16 percent on a constant currency basis, as the company continues to heavily invest in its digital infrastructure. According to Neil Ashe, president/CEO of global e-commerce, the fruits of those expenditures include two new automated online fulfillment centers, each larger than 20 football fields, that opened in the U.S. during the quarter. The warehouses, along with two more due this quarter, will go live for holiday and form “the cornerstones of our fulfillment network going forward,” he said.
The company also created a new cart and checkout, based on Wal-Mart’s global Pangea technology platform, and launched a “responsive design” that dynamically adjusts the e-commerce site to whatever device is being used to access it.
Ashe also confirmed Walmart.com’s targeted test of an unlimited free-shipping program, priced at $50 a year, and said the site flexed its algorithmic muscles in July with a “Dare to Compare” promotion that employed dynamic pricing to “help us track and deliver lower pricing than competitors.”
Noted Wal-Mart president/CEO Doug McMillon: “We believe the winners in retail will be those who can bring together the best of the offline world with the best of online to serve customers however they want to shop, and we believe Walmart has unique competitive advantages in this race.”