A Wal-Mart store at Square One shopping centre in Mississauga, Ontario, on June 14 2013.Fernando Morales/The Globe and Mail
Wal-Mart Canada Corp. saw its existing-store sales performance soften in its fourth quarter amid a food fight among grocers that has pushed down prices.
In the quarter ended Jan. 31, which included the crucial holiday period, Wal-Mart Canada's sales at existing stores were essentially flat, inching up just 0.2 per cent, the company reported on Tuesday.
The number of visitors to Canadian stores dropped 1.1 per cent while customers purchases' amounted to 1.3 per cent more than a year earlier, U.S. parent Wal-Mart Stores Inc. said. Total sales at its 400-plus stores in Canada rose 2.7 per cent as it expanded its store base while its gross profit rate grew, although the company did not say by how much.
Read more: Wal-Mart's 'test lab' a sign of the digital times for bricks-and-mortar retailer
Read more: Rollback: Wal-Mart to focus more on everyday low pricing initiative
"We continue to gain market share in traffic-driving categories like food and consumables and health and wellness," Brett Biggs, chief financial officer of parent Wal-Mart, told a conference call, citing data from market researcher Nielsen.
The results reflect Wal-Mart Canada's push to step up its grocery and health and wellness offerings as it builds more supercentres with full supermarkets, putting more pressure on rivals while fighting off mighty Amazon.com Inc. and other low-cost e-commerce players.
To respond to shifting consumer shopping patterns, Wal-Mart has been expanding its e-commerce offerings in both general merchandise and, more recently, food, developing a prototype store that focuses more than ever on its top categories and scales back on departments like furniture, cribs and strollers – directing shoppers to instead purchase those goods at its online site.
In underlining the changes, Lee Tappenden, chief executive officer of Wal-Mart Canada, said this month he is considering refraining from adding new stores in 2017, which would be the first year the chain didn't add more outlets since it arrived here in 1994.
Keith Howlett, retail analyst at Desjardins Capital Markets, said Wal-Mart Canada's deceleration of existing-store sales growth was probably the result of food price deflation as well as "intense price competition in the grocery business in Western Canada."
Even so, Wal-Mart Canada is winning away business from competitors, Nielsen data suggest. Wal-Mart Canada's market share in the key categories of food, consumer goods and health and wellness products gained 0.60 per cent in the 12 weeks ended Jan. 28, it said, citing Nielsen figures.
South of the border, Wal-Mart outperformed its sister Canadian chain, posting sales growth of 1.8 per cent at existing stores, driven by a 1.4 per cent increase in traffic to its outlets.
"We've now seen nine consecutive quarters of traffic growth in our stores," Mr. Biggs said. "Clearly, we're gaining traction."
And in a sign that Wal-Mart is tightening its inventory levels in general merchandise categories, its U.S. existing-store merchandise levels fell 7.2 per cent from a year earlier. Wal-Mart Canada's inventory "grew at a slower rate than sales," it said.
The retailer does not break out its actual Canadian sales, although they are estimated to be more than $25-billion.
Wal-Mart's overall fourth-quarter profit fell to $3.76-billion (U.S.) from $4.57-billion a year earlier, reflecting the impact from discontinued real estate projects and severance.
Excluding items, earnings per share of $1.30 exceeded the analysts' average estimate of $1.29, according to Thomson Reuters I/B/E/S.
Revenue rose 1 per cent to $130.9-billion, with the depreciation of the Mexican peso to the U.S. dollar curbing growth. Excluding currency fluctuations, sales came to $133.6-billion.
With a file from Reuters