Wal-Mart ‘Express’ on Track

BENTONVILLE, Ark. — Wal-Mart Stores said last week it plans to open its first Walmart Express during the second quarter, though it did not say where the store would be located. It was the first time Wal-Mart made a public reference to the banner name of the new small-store format, which will be under 30,000 square feet, a company spokesman told SN, though he declined to be more specific. In a call with

BENTONVILLE, Ark. — Wal-Mart Stores [4] said last week it plans to open its first Walmart Express during the second quarter, though it did not say where the store would be located.

It was the first time Wal-Mart made a public reference to the banner name of the new small-store format, which will be “under 30,000 square feet,” a company spokesman told SN, though he declined to be more specific.

In a call with analysts, Bill Simon, president and chief executive officer of Walmart U.S., said Walmart Express would accommodate both rural and urban locations.

He also said the development of the company's small format “is progressing ahead of schedule.”

Michael T. Duke [5], president and CEO of Wal-Mart Stores, said the company expects the smaller stores to help get sales for the U.S. division back on the right track.

“There is no greater priority than getting sales back into positive territory,” he said. “Walmart U.S. will continue to grow through supercenters and additional formats, and we will move forward with even greater urgency in opening small stores.”

Sales in the U.S. division declined 0.5% to $71.1 billion during the fourth quarter, which ended Jan. 31. Comps, excluding fuel, were down 1.8%, which the company attributed primarily to poor general merchandise performance. For the full year, division sales rose 0.1% to $260.3 billion, and comps fell 1.6%.

The comp declines confirmed Wall Street's fears, said Neil Currie, an analyst with UBS, Stamford, Conn. “The company beat earnings expectations, but the tale of the tape included a poor sales performance. On balance, we expect the market to focus on [that] — and the uncertain outlook for this metric could pressure the shares.”

The combination of a 1.8% comp decline this year on top of a 2% decline a year ago “plunged the two-year trend to new depths,” Currie said, with guidance putting the comp in the range of negative 2% to flat for the first quarter.

Duke said the company was disappointed by those results. “Some of the pricing and merchandising issues at Walmart U.S. ran deeper than we initially expected, and they require a response that will take time to see results,” he pointed out.

“Many of the problems stemmed from merchandising assortment and presentation issues that contributed to customer traffic declines, as well as some issues related to the remodeling program.”

Simon said he believes the U.S. stores can improve sales this year. “We've spent the last six months analyzing our assortment and presentation and delving into customer insights about their shopping habits and preferences,” he explained. “Beginning this month we are removing the high-capacity endcaps to make way for a more robust, proper Action Alley presentation.”

Walmart U.S. is also launching a four-point plan to improve performance, he said, that will emphasize low-price leadership; the broadest assortment possible; improved store remodels, including right-sizing square footage for various merchandise departments and categories; and increasing customer access through multichannel initiatives.

Wal-Mart said overall net income for the fourth quarter rose 27.3% to $6.1 billion, while sales increased 2.5% to $115.6 billion. For the 52-week year, net income was up 14.1% to $16.4 billion, with sales increasing 3.4% to $419 billion.