US: Investments continue as sales growth slows in Q1 for Walmart | Progresiv
Walmart's net sales decreased by 0.1% in the first quarter to 114.0 billion dollars, mainly as a result of a 6.6% decline in international sales which were impacted by foreign currency. Sales in its US stores and Sam's Club increased by 3.5% and 1.2% (ex-fuel) respectively, with US comp store sales up 1.1%, although weaker than in the previous quarter. Profitability continues to be impacted primarily due to the investments it is making in ecommerce and its people, with consolidated net income attributable to Walmart down 7.0% to 3.6 billion dollars. 
During the quarter, the performance of its Neighborhood Markets accelerated, with comp store sales up approximately 7.9%. This reflects work undertaken to improve customer service and product availability. In ecommerce, Walmart saw double-digit growth across many departments, with mobile traffic doubling in the quarter. The retailer continues to expand its grocery home shopping test, and is working towards improving its store pick-up program as part of its efforts to improve store and online integration. Although Walmart reported a 6.6% decline in international sales, on a constant currency basis, sales increased by 3.4%. Comp store sales increased in most of its markets, including four of its five largest markets, Brazil, China, Mexico and Canada. Comp store sales fell in the UK, with the performance impacted by continued deflation in food and aggressive competition, and in Japan as it lapped last year’s benefit of accelerated spending ahead of the consumption tax increase.
The brightest spot in Walmart’s results announcement was the 17% increase reported in global ecommerce sales, although this was slower than in the previous quarter. With heavy investment underway in this area, its ecommerce capabilities continue to improve. Progress is being made on rolling out its global technology platform to additional markets, to help accelerate the pace of change, while the supply chain infrastructure continues to be built out in the US, Brazil and Canada. While these investments are impacting the retailer’s current profitability, they are essential in positioning Walmart for a more digitally integrated retailing future. (www.retailanalysis.igd.com)
