Walmart Same-Store Q2 Sales Flat As Online Sales Soar

As has been an emerging trend in retail for the past few quarters, comparable in-store sales at Walmart showed no gains during the second quarter, as online sales soared. To help support the online growth, the megaretailer is building up its fulfillment networks globally, according to company executives.

During the period ended Aug. 1, comparable-store sales at Walmart were flat, though consolidated net sales were up more than $3.2 billion, or 2.8 percent, to $119.3 billion, the company reported. eCommerce sales drove much of the gain, as they rose 24 percent globally on a constant-currency basis, with double-digit growth in the U.S., United Kingdom, China and Brazil.

The flat same-store sales were particularly troubling to Doug McMillon, Wal-Mart Stores Inc.’s president and CEO, especially in Walmart U.S. and Sam’s Club locations. “Stronger sales in the U.S. businesses would have helped our profit performance in the quarter,” he said Thursday (Aug. 14) during a call with analysts to discuss the quarter’s earnings. “We can get better operationally and we will.”

Still, an improvement

Although Walmart’s U.S. comparable-store sales were flat, they did represent an improvement compared with last year’s string of negative growth, Charles Holley, Walmart’s chief financial officer, noted on the call. Walmart U.S. net sales, including eCommerce, increased by $1.9 billion, or 2.7 percent, to more than $70 billion during the quarter. The company projects same-store sales will remain flat during the next quarter, which would be an improvement as well from last year’s 0.3 percent decline during the same period.

Still, eCommerce is of particular importance to the company’s future. “We will continue to invest in areas such as technology, talent and fulfillment,” Holley said. “I would like to add that, although we are slightly revising our e-commerce sales growth to 25% for this year, we continue to be very encouraged by the progress we are making on our strategic goals.”

Commenting on the company’s eCommerce activities, Neil Ashe, Walmart’s president and CEO of global eCommerce, noted how the company’s efforts to integrate the digital and physical worlds are offering customers easier and more convenient ways to shop. “We are working closely with the operating segments around the world to make all of this happen,” he said.

eCommerce growth

While comparable-store Walmart U.S. location sales were flat, eCommerce sales grew by double digits, Ashe said. “The major highlight was that we started to roll out a new walmart.com site experience,” he said. “To the consumer, it’s simpler, it’s faster and it’s easier shopping experience. But it also represents a major technical feat that involves a top-to-bottom rebuild of our entire global technology platform.”

Beside implementing a new global technology platform, the company also has been building next-generation fulfillment networks globally to deliver orders faster and more efficiently, Ashe said. Walmart has a new large-scale fulfillment center under construction in Indiana, which will complement those it has opened in Texas and Pennsylvania in the past 12 months. The company also enabled 20 more stores to fulfill online orders during the quarter, and 20 percent of units order on walmart.com are now shipped from stores, he said.

“Our algorithms are helping to determine the optimal shipping point, whether from an online fulfillment center, a store [destination center] or a store,” Ashe said. “And in Brazil, we opened a new fulfillment center in Cajamar that is now fully operational. We will announce additional fulfillment centers around the world over the coming months.”