Walmart warns on US weakness

Net income at Walmart rose 5.7 per cent year-on-year in the second quarter to $3.8bn, or $1.09 a share. Total revenues were up 5.4 per cent to $109.3bn.

“We remain concerned about the economic pressure on our customers and the uncertain impact it can have on their shopping behaviour,” Bill Simon, chief executive of Walmart’s US business, said in a statement. “With this volatility, it is as important as ever to deliver on Walmart’s one-stop shopping promise for broad assortment and everyday low prices.”

Walmart, which is seen as a bellwether for the US economy, has been under pressure to improve its performance in the US after nine consecutive quarters of falling same-store sales. Once revered for its “everyday low prices”, dollar stores and Amazon have been eating into Walmart’s market share.

Comparable store sales at Walmart in the US, excluding fuel sales and purchases at Sam’s Club stores, were down by 0.9 per cent from a year ago.

Last month, a Morgan Stanley survey found that 60 per cent of Walmart customers no longer believe that the retailer’s prices are lower than those of its competitors.

The company has been working to correct changes it made to its stores and inventory that proved to be unpopular. It is also branching out with smaller “express” stores that fit better in urban areas.

Meanwhile, Walmart has been retooling its international and online businesses. Last week it said two of its top e-commerce executives would leave the company and that its online leaders in Japan, Canada and the UK would report to executives responsible for those countries, rather than a central online leader.

Walmart has also considered making a bid for Carrefour’s Brazilian business, according to people familiar with the matter, in an effort to prop up its performance there.

Revenues at Walmart International were up 16.2 per cent to $30bn in the second quarter.

Walmart narrowed and raised its 2012 guidance to a range between $4.41 and $4.51 a share.

Shares of Walmart rose 1.84 per cent to $50.90 in pre-market trading on Tuesday.

 (Ft.com)


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