Walmart Canada's fresh focus helps increase customer traffic
In America, Walmart is spending billions of dollars to pay its hourly workers more and spruce up its stores and online services. But its fourth-quarter results show that it'll take time to fix its business.
The world's largest retailer's adjusted fourth-quarter results beat Wall Street estimates. But profit fell 8 per cent as the company faces higher costs.
Despite its struggles in the U.S., Walmart Canada, proved yet again to be a top performer in the company’s fourth quarter.
Canada delivered a “strong performance,” David Cheesewright, head of Walmart international, said in an earnings call on Thursday.
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Walmart introduced a new cost analytics program in its Canada and U.K. stores. This program provides merchants with improved tools and cost visibility, which enables them to better negotiate with suppliers. Cheesewright said they were pleased with the early results of this program and planned to expand it to additional markets later this year.
Net sales in Canada grew 5.8%, while comp sales rose 4.3%.
Cheesewright attributed the sales growth to strong customer traffic as a result of Walmart Canada’s “improved fresh offer, continued price investments and improvement in operational standards.”
He also pointed to positive market share in food, consumables and health and wellness for the 12 weeks ended Jan. 23, although no specific numbers were provided. “I'm especially pleased with our sales in Canada given the economic pressures in the oil-producing provinces,” he said.
Walmart Canada’s operating income was down compared to last year, which Cheesewright attributed to “certain land impairments” and preopening expenses associated with the acquisition of 13 vacant Target locations.
Walmart Canada’s online sales have continued to grow, said Cheesewright. Earlier this month Walmart expanded its online grocery pickup program to six stores in Toronto’s suburbs. It plans to expand to another six suburban stores this month.
Walmart’s online sales in the U.S., however, have been losing steam. During the fourth-quarter, global e-commerce rose 8 per cent, well below the 20 per cent pace just a few years ago.
Walmart faces pressure on all fronts. Its low-income shoppers remain cautious. Walmart also faces increasing competition from online leader Amazon.com, dollar stores and traditional grocers, all of which are pushing lower prices and convenience.
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Walmart is making lots of changes that it says will help it stay competitive in a changing retail landscape. It's spending $2.7 billion on higher wages and other investments for its hourly workers over a two-year period.
It has also stepped up its investment online and in the stores. It's better stocking shelves and is improving the fresh areas of its stores, which are crucial to driving traffic. And it's expanding online grocery shopping to more than 150 locations across more than 20 markets in the U.S.
Last month, Walmart announced it was closing 269 stores, including 154 in the U.S. The closings are part of the company's overall review of its operations to make it more nimble to better compete with rivals.
During the holiday season, Walmart made a concerted effort to pull back on temporary promotions and focus on its “everyday low prices,'' its bedrock price strategy.
“We are seeing momentum in our Walmart U.S. business,'' said Doug McMillon, president and CEO of Walmart in a statement. But he added, “We've still got a lot of work to do.''