Wal-Mart Stores today said it was ramping up spending to compete with online retailers and other discounters after quarterly same-store sales dropped in the United States, its biggest unit.
The world's largest retailer suffered a 0.4 per cent dip in same-store sales at its Walmart chain in the US in the quarter ending January 31, as customers confronted difficult winter weather and reductions in government benefits such as food stamps and higher taxes.
Results were also marred by a series of write-offs in Wal-Mart's international operations, including charges to cover tax assessments and labor claims in Brazil, the closure of underperforming stores in Brazil and China and the termination of a joint venture in India.
Wal-Mart's president and chief executive Doug McMillon, who took the reins of the company on February 1, said that increased spending on e-commerce and small-store construction was meant to "increase our relevance" to consumers.
Quarterly earnings for the fiscal 2014 fourth-quarter fell to USD 4.4 billion, a sharp 21 per cent drop from USD 5.6 billion a year ago. Earnings per share fell to USD 1.37 from USD 1.68.
The US results were a disappointment after Walmart executives vowed aggressive promotions heading into the crucial holiday November-December shopping season.
Although the company characterized store traffic ahead of the "Black Friday" kick-off as brisk, the results suggested it was unable to sustain the momentum. US comparable traffic fell 1.7 per cent during the quarter from last year.
Bill Simon, head of Walmart US, said he was "disappointed" with overall sales in the quarter, but "particularly proud" of some aspects of performance. US stores scored positive comparable sales during the six-week period ending December 27, he said.
But Ken Perkins, an analyst at Morningstar who follows Wal-Mart, said holiday-sales profits were likely pinched by aggressive discounting.
