February 25, 2020

Wal-Mart Reports a Sales Increase in U.S. Stores

Sales at American stores open at least a year increased during the last three months, reversing a negative trend that began in 2009, the company announced on Wednesday. The uptick in same-store sales was a positive sign ahead of third-quarter earnings, which will be announced on Nov. 15.

“Three consecutive months of positive U.S. comps is a good way to be heading into the holiday season,” William S. Simon, president and chief executive for Wal-Mart’s United States division, said at the company’s annual meeting for investors at its headquarters in Arkansas.

Mr. Simon said one reason for the turnaround was the company’s decision to restock more than 10,000 items that had been removed as part of an effort to clean up the stores and make them less cluttered. He said customers were shopping less because they didn’t see the items they wanted.

“We never lost customers,” he said. “What we lost was trips of current customers.”

In addition, Mr. Simon said lower gas prices probably helped bring customers to the stores more often.

The resilience of Wal-Mart’s turnaround will be put to the test during the holiday season, which tends to account for a fifth of retailers’ sales for the year. Wal-Mart officials said they would double the amount they were spending on television advertising during the holiday season, compared to last year.

The first holiday ads should appear in the next few weeks. They will promote Wal-Mart’s layaway program, which it scrapped in 2006 but decided to start again because of demand from consumers.

Shares of Wal-Mart, the nation’s largest discount retailer, increased 48 cents and closed at $55.20 on Wednesday.

While sluggish sales in the United States have partly been offset by more robust results at the company’s Sam’s Club stores, and its Wal-Mart stores overseas, several analysts said the positive turn in the company’s United States business was significant given how long the business had struggled — nine straight quarters of negative same-store sales.

“Heading into today’s event, that is one of the big hurdles people want to hear,” said Joseph Feldman, of Telsey Advisory Group. “The good news is they sounded positive, just in general.”

David A. Schick, of Stifel Nicolaus, said Wal-Mart finally seemed to be recovering from an abrupt change in its strategy of offering fewer products and more upscale items. When the company decided to drop that strategy last summer amid lackluster results, he said it was like “turning the battleship.”

“This is a company that reversed course and felt that friction and pain throughout the model,” he said. “There’s been enough time where that friction is lessening.”

Besides adding items back to its stores, Wal-Mart also decided to focus on more basic apparel, Mr. Schick said. “A return to basics is the primary focus,” he said.

Wal-Mart officials said Wednesday that they planned to decrease capital expenditures in the 2013 fiscal year by 7 percent from the 2012 fiscal year. Even so, because of reductions in remodeling and construction costs, the retail chain plans to build as many as 250 stores in the United States in 2013, compared to 160 in 2012.

Among the new stores planned for 2013, roughly 100 will be smaller-format neighborhood markets and express stores.

Article source: http://feeds.nytimes.com/click.phdo?i=47cdfc3b206b3d4e15ab35b918dbb3f7

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