Sam's Club store. (Photo Credit: Caldorwards4)
UNITED STATES
Monday, August 18, 2014, 01:30 (GMT + 9)
The operating income of the world's largest retailer Walmart declined by a 2.4 per cent in US during the fiscal second quarter while online sales increased.
This fall has been the result of the sluggish sales, higher-than-expected health care costs and the need to invest more in its e-commerce operations, The Associated Press reported.
The company reported a net income of USD 4.09 billion in the second quarter ending on 31 July, up 0.6 per cent from a year ago and adjusted earnings per share of USD 1.21, matching Wall Street estimates.
For his part, Doug McMillon, Walmart's president and chief executive, said the discount retailer had clocked up encouraging performances in its international business, its new small-format "Neighborhood Market" stores in the US and in e-commerce.
"We wanted to see stronger comps in Walmart US and Sam's Club, but both reported flat comp sales. Stronger sales in the US businesses would've also helped our profit performance," McMillon said in a statement.
Walmart US head since early August Greg Foran pointed out that the most notable operating headwind in the second quarter came from health-care costs, which increased USD 180 million from a year ago, "well above our initial estimates."
Foran, who is in charge of more than 4,000 Walmart stores and 1.3 million employees, said that health-care costs were expected to grow more than USD 500 million for the fiscal year ending 31 January.
On the other hand, global e-commerce sales grew about 24 per cent in the quarter. The company said its 4 most important markets – the US, Britain, China, and Brazil – saw double-digit growth.
"We remain focused on price investment across all our markets and expect to continue driving improved comp performance," said David Cheesewright, Walmart International president and CEO.
And he added: "I am pleased with the trends in many of our markets, which were driven by a continued focus on being the lowest cost operator."
In this regard, McMillon explained their investments in e-commerce and mobile are very important, as the lines between digital and physical retail continue to blur and that their customers expect a seamless experience, and so they are working to deliver that for them around the world.
To lure more customers to its websites and better compete with online retail giant Amazon, Walmart recently snapped up companies specialized in data analysis and online marketing, and has begun rolling out a global technology platform.
The company just launched an online price-comparison app, Savings Catcher, to allow customers to get back the difference they paid when they find a local competitor offers a lower advertised price.