Exchange rate fluctuations have affected Walmart aversely: its third quarter turnover only went up 1.6 % to 114.9 billion dollar (85 billion euro). Had exchange rates remained stable, the turnover would have increased 2.7 %.
Exchange rates and economic slump
Walmart International represented nearly 30 % of total third quarter sales, eclipsing last year’s third quarter by 0.2 %, which means it pretty much remained stable. Removing exchange rate fluctuations, the third quarter turnover would have increased 4.1 % internationally, reaching 34.4 billion dollars (26.6 billion euro).
According to president Doug McMillon, Walmart International not only had to battle negative currency exchange rate fluctuations, but also the challenging economic climate. This also impacted important international growth markets like Brazil and China.
Thorough measures in India, China and Brazil
The division is therefore taking thorough measures, including the removal of some 50 underperforming Chinese and Brazilian stores. It will also dissolve its forced marriage with Indian joint venture partner Bharti. Walmart aims to become an independent distributor in the global growth market.
"In the fourth quarter, we will continue our progress on managing expenses well and staying focused on growing sales, including e-commerce. Still, the slow-growth macroeconomic environment is persisting through the first month of this quarter, and the markets continue to be competitive”, McMillon has divulged.
Like-for-like growth is dropping in the US
Walmart's home market, America, managed a 2.4 % third quarter turnover increase to 67.7 billion dollars (50.4 billion euro). Like-for-like sales dropped 0.3 % for Walmart US’s third quarter: mainly due to the large Supercenters, because the 'smaller' 4,000 sqm Neighbourhood Markets boosted the like-for-like sales 3.4 %.
According to Walmart, it has captured market share in several sectors: food, consumer goods, beauty products and over the counter drugs. That puts Walmart in direct competition with supermarket chains, like the American divisions belonging to Delhaize and Ahold. The clash will be quite fierce this festive holiday, when all parties will be trying to entice the consumer.
“Our most important priority is growing top line sales, including comp sales”, CEO Mike Duke mentioned. “The retail environment, both in stores and online, remains competitive. Walmart has aggressive plans to help our customers enjoy the holiday season.”
Fiery Christmas, for Ahold as well
American food retailers will be experiencing a fiery Christmas period, not in the least Ahold with only a minimal 0.2 % growth in the third quarter. If like-for-like sales are considered, it is even 0.1 %.
“In the United States we continue to operate in a very competitive environment with low inflation. With limited sales growth we gained market share in the supermarket segment and maintained our share in the all-outlet market. We were able to maintain a solid underlying operating margin, supported by continuous cost savings”, Ahold’s CEO Dick Boer has stated.
Ahold USA’s net turnover in the third quarter was 5.9 billion dollars (4.4 billion euro). The turnover growth remained pretty much flat (+ 0.2 %), while Walmart – being much larger with a 67.7 billion dollars (50.16 billion euro) turnover – still sold 2.4 % more in the third quarter. On a like-for-like basis, Ahold performed slightly better, with a minimal 0.1 % growth, while Walmart US had to take a minor 0.3 % hit.
(translated by Gary Peeters)