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clubpickup.jpg Wal-Mart Stores Inc.

E-commerce soars in Walmart’s Q2

U.S. stores gain expense leverage; grocery comps best in years

Wal-Mart Stores on Thursday said sales, comps and store traffic in the U.S. all increased during its fiscal second quarter, driven in part by its best comps in grocery in five years.

In addition, U.S. e-commerce sales grew by 60% in the quarter, while U.S. stores leveraged their expenses, helping to drive slightly better quarterly earnings than anticipated. The quarter ended July 28.

“The U.S. store team has done a great job staying focused on providing a fast and easy customer experience while managing expenses and inventory,” said Doug McMillon, CEO. “Customers are responding to the improvements we’re making to deliver a seamless shopping experience that saves them time and money and that’s exciting to see.”

Traffic in U.S. stores was up by 1.3% and the average ticket increased by 0.5% comprising 1.8% non-fuel comparable-store sale gains, which was within the company’s expected range. Grocery including food and consumables posted “low single-digit” comps in the period. Those gains were the strongest for that department since 2012, and were boosted by increased store traffic, growth in grocery pickup and a return to inflation in food, particularly in meat, excluding price investments, officials said. Comps at Neighborhood Market stores grew by about 5.6%.

Walmart is now operating pickup at 900 stores with a goal of 1,100 by year end.

“We continue to be really happy with the online grocery program,” Steve Schmitt, VP of investor relations, said in a conference call. “The net promoter scores are really strong. It really is a differentiated offering that we know our customers love and need to expand it because we know it's a hit for customers. We also continued to expand the assortment that they can order utilizing online grocery. So [it’s] convenient for customers. They really like it. It works for us. It gives us a nice halo to the overall business from an NPS (Net Promoter Score) standpoint, and we'll continue to look to roll that out.”

Asked by an analyst to comment on hard discount competition, Schmitt said Walmart was “monitoring [Lidl’s] results every closely,” and added: “We think we know for the most part what their game plan is, but we like our plan, and we'll continue to make progress with the customer. And if we do that we think we will do well.”

Walmart is about one-third through a multiyear plan to invest “billions” in lower prices, officials said, and is focusing efforts at building distinction in its Great Value and other private brands as a means of heading off competition from hard discounters.

Walmart’s U.S. sales totaled $78.7 billion in the quarter, a 3.3% increase. Companywide sales of $123 billion increased by 2.1%. Adjusted earnings per share of $1.08 beat analyst estimates by a penny.

TAGS: Walmart
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