Overall, net sales for the third quarter increased 2.6% to $101.2 billion, driven by a hefty 9.3% gain at Walmart International. And income from continuing operations rose to $3.4 billion, from $.3.2 billion in the third quarter last year. But in the U.S., comparable-store sales fell 1.3% -- the sixth straight quarter of declining sales for the Bentonville, Ark.-based company. Those decreases came both in terms of less traffic, it says, and also in average ticket sales.
"When the economy was at its worst, there were a lot of recession refugees shopping at Walmart," brand strategist Adam Hanft tells Marketing Daily. "And the question always was: 'What kind of job will Walmart do keeping those shoppers when the economy recovers?' And people were not happy with the experience they had there."
Combine that with the increasing economic pressure on its core, lower-income shoppers (68% of Wal-Mart's customers earn less than $70,000 per year), he says, and you've got Walmart's current dilemma.
Still, Walmart says the U.S. business is "on the right track.... Walmart U.S. will be the price leader this holiday season, and I am confident about improving comp trends for the fourth quarter," Mike Duke, president/CEO Wal-Mart Stores, said in the company's earnings release, adding that the increase in its profit forecast reflects those fourth-quarter expectations.
For the fourth quarter, the chain is now forecasting comparable-store sales results anywhere in the range of a 2% gain to a 1% decline. "Like back-to-school and Halloween, we expect that a lot of the spending will come close to Christmas," Bill Simon, president and CEO of Walmart U.S., said in a prerecorded call.
He added that the company's marketing message will continue to stress those savings. "Our holiday message is focused on basket savings. We believe that we have the right level of media buy for the fourth quarter. We also have increased our efficiencies through a strategic program of digital, print and electronic buys. We have a number of aggressive programs underway to reach the customers often and early for the holidays."
Those steps include offering free shipping on 60,000 items, for example, cutting toy and electronics prices early in the season, and opening at midnight on Black Friday.