Walmart’s big quarter stops at the border
Canada sales flat as online fight heats up in U.S.
TORONTO • Walmart Canada posted flat same- store sales in the fourth quarter as the retailer’s customer traffic dipped and it battled intense price competition from industry rivals.
The mass merchant reported just a 0.2 per cent climb at stores open for more than a year in the period ended Jan. 31, driven by a 1.1 per cent decline in traffic and a 1.3 per cent rise in average transaction size at the till. Same- store sales strip out the effects of square footage changes on the results, and Tuesday’s results marked the third consecutive quarter of tepid same- store sales performance at Walmart in Canada after a robust fiscal 2016.
Overall, Walmart Canada’s net sales rose 2.7 per cent on flat operating income in the fourth quarter, and the retailer gained market share in the food, consumables health and wellness categories.
“Results were likely affected by food price deflation in Canada, as well as by intense price competition in the grocery business in western Canada,” Keith Howlett, an analyst at Desjardins Securities, wrote in a note to clients on Tuesday.
It appears the competition will only intensify. “The primary source of the expected increase in square footage in the grocery market in Canada in 2017 will be Costco Canada,” Howlett noted.
Costco is opening seven of its warehouse club locations in fiscal 2017, compared with a typical pace of one-to-three store openings per year in Canada. Walmart Canada has 408 locations, ending the year with a two per cent increase in square footage from a year earlier.
Meanwhile, parent company Wal- Mart Stores Inc. benefited from a stronger t han expected performance on its home turf in the quarter, in contrast to many U. S. retailers’ disappointing holiday results. The retailer also made significant strides in its web division, which competes head-to-head with online giant Amazon, and was able to lure in reluctant shoppers with heightened discounts.
The company said U. S. same-store sales rose 1.8 per cent, excluding fuel price f l uctuations, during t he fourth quarter ended on Jan. 31.
Analysts on average were expecting a 1.3 per cent increase, according to research firm Consensus Metrix. The company’s shares rose three per cent to close at US$71.45 Tuesday in New York.
Net income attributable to Walmart fell to US$ 3.76 billion from US$ 4.57 billion a year ago, due to an impact from discontinued real estate projects and severance. Excluding items, the retailer earned US$ 1.30 per share, topping analysts’ average estimate of US$1.29, according to Thomson Reuters.
Revenue rose one per cent to US$ 130.9 billion. Online sales rose 29 per cent, which contributed 0.8 per cent to fourth- quarter same- store sales. RESULTS WERE LIKELY AFFECTED BY FOOD PRICE DEFLATION.