Walmart Sales Slow as Giant Takes Hard Look at Marketing, Media

Same-Store Sales Growth Flattening Despite More TV Spending, Lower Gas Prices

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Walmart store exterior.
Walmart store exterior. Credit: Courtesy of Walmart via Flickr

Walmart reported revenue below analyst expectations for its fiscal fourth quarter, which comes as the retailer takes a hard look at its marketing -- and days after Walmart said it will part ways with longtime media shop MediaVest.

Walmart U.S. comparable-store sales were up 0.6% for the quarter ended Jan. 31, the sixth straight quarter of growth. However that's well below the 1.5% growth pace a year ago and comes at a time when falling gas prices put more money in shoppers' holiday wallets. Overall, the unit's sales rose 2.4% to $81 billion.

In a pre-recorded conference call, Walmart U.S. president Greg Foran said the effect of gas prices was balanced by deflation in meat and dairy prices, warmer-than-normal temperatures and delays in IRS tax refund checks. He said he was happy with continued foot traffic growth, up 0.7%, even if average tickets were down slightly.

And Mr. Foran said the six-week holiday period was a success, even with a "sensible decision to pull back on short-term, deep price investments."

While Walmart hasn't said exactly what led to the decision to part ways with MediaVest, a spokeswoman earlier this week said, "We are taking a different direction and looking for new ways to use media." The chain still has not indicated what will happen to the business.

Data from iSpot.tv show Walmart's TV spending rose more than 11% during its last fiscal quarter to $151 million vs. a year earlier. With Walmart buying much of its digital media programmatically via its own Walmart Exchange, TV is the biggest piece of media handled by MediaVest.

Walmart U.S. Chief Marketing Officer Stephen Quinn announced his retirement in December, replaced by longtime Walmart marketing executive Tony Rogers, who most recently led marketing in China. The retailer also said it was bringing former Target and DreamWorks marketer Michael Francis on board as a consultant.

Walmart's stock fell more than 2% vs. a roughly flat broader market in afternoon trading. Also weighing on the stock was the retailer pulling back on this year's sales forecast, which it said would be roughly flat, hurt by currency devaluation and the decision to close 259 stores last month.

E-commerce, a growing focus for Walmart, also is slowing, with sales up 8% globally last quarter, vs. 12% for the full year and continuing a slowing pattern in recent years. Again, currency effects on overseas sales had an impact, Walmart said.

Despite similar currency effects, Amazon reported e-commerce sales up 19% to more than $33 billion globally last quarter, with North American sales up 24% to $21.5 billion.

"While we would have liked to have seen higher e-commerce sales growth, we continued to make good foundational progress for the future," said Walmart Chief Financial Officer Brett Biggs on the earnings call. Even so, e-commerce accounted for about half of Walmart's comp sales gain for the quarter, Mr. Foran said.

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