Wal-Mart second-quarter forecast trails estimates on economy

Neighborhood Markets

The retailer also has been opening more small, neighborhood markets to better compete with dollar-store chains such as Dollar General Corp. and Family Dollar Stores Inc. Wal-Mart prices were below Dollar General’s 100% of the time in household goods and more than 85% of the time in grocery, auto supplies, pharmacy and health and beauty aids, according to the study.

Wal-Mart’s international division increased first-quarter sales 2.9% to $33 billion. Excluding the effect of foreign-currency fluctuations, sales would have risen 5.4% to $33.8 billion.

The company has been working to reintroduce its everyday low price strategy in Brazil and China after struggling to find strong sales growth in both markets. In India, Wal-Mart has faced questions over lobbying.

The company said last week it would invest 100 million yuan ($16.3 million) over three years to improve food safety in China as it works to bolster its image after a series of food-related citations.

Wal-Mart increased first-quarter comparable-store sales in the U.K., Africa, Mexico, Central America, Brazil, Chile, Argentina, China and India, while sales on that basis fell in Canada and Japan. Operating income in the international division fell 4.7% to $1.26 billion as expenses rose.

“Expenses growing faster than revenue is disappointing,” Yarbrough said. “International has been choppy.”

Bloomberg News

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