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)
