While Wall Street was disappointed with Walmart’s second quarter results, it does not mean they are not a force other food retailers as well as manufacturers, both large and small, must reckon with according to The Food Institute.
WHOLESALE & RETAIL FOOD INFLATION TRENDS DOWN
While Wall Street was disappointed with Walmart’s second quarter results, it does not mean they are not a force other food retailers as well as manufacturers, both large and small, must reckon with according to The Food Institute. Sales for the world’s largest retailer, and the largest food retailer in the U.S. totaled $227 billion in the six months ended July 31, up 6.4% from a year earlier. About $162 billion of that was from U.S. operations, 7% of all U.S. retail sales during the same period, according to the Food Institute which tracks retail sales and food prices. That’s a big price of pie.
During last week’s management call talking about the numbers, one comment made by Bill Simon, president and CEO of Walmart U.S. during last week’s management call deserves real attention:
“During the quarter, our average comp traffic increase was equal to serving on average, 80,000 additional customers every day of the 13-week period….when I think about our comp in terms of pure customer numbers, its pretty amazing.”
Overall, he noted those visits represented a 0.4% increase in comp traffic along with a 1.8% increase in ticket for the quarter. And this does not include the Sam’s Club warehouse stores.
With supermarket sales barely keeping up with inflation, many in the industry ask where those sales are going. The Food Institute notes that alternative retailers like warehouse clubs and drug stores are two areas that are taking market share from traditional supermarkets, but Wal-Mart continues to be the force to reckon with. Just consider that 80,000 additional customers every day is the equivalent of close to the entire population of Santa Monica, CA entering a Wal-Mart each day -- a number that continues to take business that traditional supermarket previously had.
As for Walmart, do not forget that data does not include SAM’S CLUB’s contribution, where comp traffic and ticket were up by 1.8% and 2.4%, respectively. Rosalind Brewer, president and CEO of Sam’s Club noted:
“Grocery…remains key to driving traffic and attracting new members. It is a key differentiator for us in the market place, and as we continue to invest in price, it will remain so.”
Lastly, remember that Wall Street frowned somewhat on Wal-Mart’s results last week because these U.S. operations did not do as well as expected. International operations did, however, with sales climbing over 10% in the same period, accounting for 28% of Walmart’s sales.
This and analysis of the most recent sales and price data from the U.S. government can be found in the latest Food Institute Report at www.foodinstitute.com.