Walmart sales see biggest growth in 10 years

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Europe

Walmart reported its strongest US comparable sales in more than ten years on Thursday, as e-commerce investments paid off in a strengthening American economy.

The world's biggest retailer said rising online sales, and investments aimed at keeping prices low, boosted store traffic at its namesake US business, the most critical unit for earnings.

Comparable US store sales rose 4.5 percent in the second quarter, the best growth in more than 10 years and a key component in a 3.8-percent rise in overall revenues to 128 billion US dollars compared with the year-ago period.

Briefing.com praised the gains as "extremely impressive coming off such a large base," but said it was "not too surprising given the strength of the US consumer."

Despite the revenue gains, Walmart reported an 861-million-US-dollar loss following pre-tax costs of 4.8 billion US dollars on a majority stake in its Brazil business.

The company also had lower profit margins compared with the year-ago period, as it didn't pass on the hit from higher costs for shipping goods.

The company, competing hard for customers with Amazon and other e-commerce companies, has been adding features like grocery pickup at US stores, now offered at more than 1,800 locations or nearly 40 percent of the overall US network.

Other investments have gone into upgrading Walmart's smartphone applications to speed shopping of school supplies and other items, and pickup towers that allow customers to order goods from the app and retrieve them at automated in-store contraptions.

E-commerce sales at Walmart's US business rose 40 percent in the quarter, a solid figure for Chief Executive Doug McMillon, whose heavy e-commerce investments have at times worried Wall Street analysts.

McMillon said the sales jump reflected sound execution of the strategy, but he also attributed the gains to strength in the economy and seasonal factors, such as higher sales for air conditioners due to warm weather.

"Customers tell us they feel better about the current health of the US economy as well as their personal finances. They're more confident about their employment opportunities," he said. "No doubt we were aided by tail winds during the second quarter."

Sales also rose in Walmart's Sam's Club wholesale business and in its international business, which has been a focal point of recent big-ticket transactions.

The company won regulatory approval in India for a purchase of a majority stake in online company Flipkart, and is working through regulatory approval in Britain to combine its Asda and J Sainsbury.

The retailer sold 80 percent of Walmart Brazil to Advent International, while keeping 20 percent of the business. The deal was announced in June and closed Aug. 1.

Source(s): AFP