While it’s not a full quarter, Mike Duke, president and chief executive officer of Wal-Mart Stores Inc., was clearly pleased to reveal Wednesday that the retail giant has logged three months in a row of positive comp-store sales.
This story first appeared in the October 13, 2011 issue of WWD. Subscribe Today.
After nine consecutive months of declining same-store sales, Wal-Mart began an upward trend in May, registering increases in July, August and September, Duke said at the company’s 12th annual analyst meeting in Bentonville, Ark., where the company is headquartered.
Comparable-store sales growth is a top priority for Wal-Mart and Sam’s Club, along with improved profitability in international markets, and reduced sales, general and administrative expenses, with the savings invested in lower prices for consumers. Duke also cited “making visible progress in building the e-commerce business” as a goal.
Wal-Mart plans to grow sales in 2012 by 5 to 7 percent and reduce operating expenses as a percentage of sales by more than 100 basis points over the next five years, Duke said. Global capital expenditures will range from $13 billion to $14 billion in the next fiscal year. In the U.S., Wal-Mart plans to spend $6 billion to $6.5 billion in the next fiscal year, increasing store openings to between 210 and 235, from the previously announced 142 to 150. Wal-Mart’s new smaller Supercenters are 90,000 square feet to 150,000 square feet, compared with the traditional average of 180,000 square feet.
The retailer is making another “slight change to our real estate strategy,” said Bill Simon, ceo of Wal-Mart U.S. “We’re looking for opportunities to grow market share, not just in low-share urban markets, but in medium- and high-share markets.” Charles Grom, a retail analyst who attended the meeting, said in a note that Wal-Mart’s highly touted small Express store format for urban markets isn’t being rolled out in a big way. “There are only five Express stores today, with five more planned before yearend,” he said. “The company continues to test the merchandise assortment as well as the impact of adding a pharmacy and a gas station.”
Success with apparel has long eluded Wal-Mart as the company vacillated between basics and more stylish offerings. Duncan Mac Naughton, chief merchandising officer of Wal-Mart U.S., made the company’s position perfectly clear. “We’re very focused on winning in basics such as socks, underwear and basic tops,” he said. “It’s who we are and what we stand for. We’re going to simplify the offer. We’re going to have the items, brands and solutions our customers want. We’re growing our assortment with our national brand partners and growing plus sizes across the business. We’ve struggled for years in apparel. While we still have negative comps, we’re encouraged.”
Mac Naughton said Wal-Mart is taking the same basics approach to home. Areas on the upswing include hunting and automotive, where more brands are being added, and fishing, which was allocated 10 percent more space in all stores.
“The traction wasn’t as fast as we would have liked, but it’s working,” Simon said of the comp growth. He noted that food is leading the business from a traffic perspective