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While U.S. parent Walmart Inc. reported on Thursday strong first-quarter results, its Canadian division said traffic to its stores declined by 0.5 per cent from a year earlier.

Mark Lennihan/The Associated Press

Amid moderate sales gains, Walmart Canada Corp. struggled to attract customers to its stores in its first quarter, underlining the lacklustre business among some of this country’s retailers.

And while U.S. parent Walmart Inc. reported on Thursday strong first-quarter results, its Canadian division said traffic to its stores declined – by 0.5 per cent from a year earlier – for the first time in two years.

As well, Walmart Canada’s non-food sales, including apparel, were disappointing, and operating margins declined for a seventh consecutive quarter (excluding the sale of its bank) tied partly to minimum-wage increases, its executives said.

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“The mix of sales towards lower margin categories pressured gross profit and operating income,” Doug McMillon, chief executive of the parent company, said about its Canadian business. “We’re confident that our focus on the customer, as evidenced by gains in satisfaction scores, will enable us to improve our performance during the year.”

Retailers in Canada have grappled with sluggish growth over the past several months, hurt by a harsh winter in parts of the country and rising consumer debt.

The most recent Statistics Canada retail sales figures showed that “cold weather again kept shoppers indoors in February,” said retail consultancy J.C. Williams Group in a recent bulletin, with February sales at all stores growing only 1.6 per cent from a year earlier.

Still, retail consultant Ed Strapagiel said there is some indication that Canadian retail sales growth has hit bottom “and may be at least steadying out.”

Walmart Canada’s results for the three months ended April 30 reflect the challenges. Its overall sales in Canada rose 1.3 per cent while same-store sales, a key retail measure at outlets open a year or more, grew 1.2 per cent. On a brighter note for the company, average customer spending climbed 4.1 per cent.

“The combination of traffic-limiting weather events and the late arrival of spring weather presented real challenges to most discretionary retailers in eastern Canada," Keith Howlett, retail analyst at Desjardins Securities, said in a note on Thursday.

“After 25 years of growth in Canada, Walmart is reaching maturity in its brick-and-mortar operations,” he added. With 411 stores now compared with just 122 when it started here in 1994, Walmart Canada is shifting its focus to its e-commerce as it is in the United States, he said.

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Even rival discounter Costco Canada, known as a stellar performer, has weathered some weaker trends. Its same-store sales fell 1.9 per cent in the four weeks ended May 5 and rose 1.1 per cent in the 35 weeks ended May 5, the company reported. Excluding the impact of factors such as fluctuating gas prices, those sales grew 2.3 per cent in the four weeks and 5.4 per cent in the 35 weeks.

Irene Nattel, retail analyst at RBC Dominion Securities, said Walmart Canada didn’t mention anything about its grocery market share in its first quarter, for the first time since it started divulging that data in 2011. Walmart Canada “likely lost share to peers,” she said.

Loblaw Cos. Ltd., the country’s largest retailer that includes Shoppers Drug Mart, also reported mixed results in its first quarter; its same-store food sales rose just 2 per cent while overall profit fell to $198-million from $377-million a year earlier.

Canadian Tire Corp. Ltd.'s same-store sales rose 6.1 per cent in its first quarter ended March 30, but profit slipped to $69.7-million from $78-million a year earlier.

“What we have seen is a tremendous take-up of our product offerings when the kind of weather and timing of the year is appropriate for our revenue and that’s what really encourages us,” Canadian Tire CEO Stephen Wetmore said last week. He added he hasn’t seen signs of a weakening consumer.

However, the retailer also hasn’t seen signs of consumers willing to pay higher prices, prompting Canadian Tire to keep a lid on price increases, suggested Greg Hicks, president of Canadian Tire’s retail division. “No one seems to want to give an inch right now.”

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Meanwhile, in the U.S., Walmart reported its best first-quarter same-store sales gains in nine years at its key U.S. division, up 3.4 per cent. Executives also warned that prices will rise as a result of higher tariffs on goods from China.

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