Walmart profit falls on more spending
NEW YORK: Walmart updated investors on Thursday on its latest new gadgets and time-saving pick-up options to lure shoppers to stores and away from archrival Amazon.
The good news? The company’s array of investments in ecommerce, store beautification, low prices and higher employee pay are driving up store traffic.
The bad news? Profits are down.
Walmart US, the biggest division at Wal-Mart Stores, scored a 1.8 per cent rise in comparable sales in the second quarter compared with the year-ago period, its 12th straight quarter with positive sales in the closely-watched benchmark.
Revenue rose 2.1 per cent to US$123.4 billion (RM529.3 billion). But net income fell 23.2 per cent to US$2.9 billion. Factors included more aggressive spending on e-commerce and low price investments, as well as costs of US$788 million connected to a one-time debt payment.
Executives expressed confidence in Wal-Mart’s strategy and highlighted an especially strong performance in the grocery business, which experienced the biggest jump in five years, in part due to price inflation in meat and produce.
Wal-Mart holds the biggest share of the American grocery market of any retailer, with its network of nearly 4,700 stores that the company says are located within 10 miles of about 90 per cent of the US population.
But Wal-Mart is girding for a more direct head-to-head battle with Amazon with the tech giant’s impending purchase of Whole Foods Market.
New tech-oriented initiatives include the expansion of a programme that lets consumers pick up online orders. AFP