Wal-Mart to strengthen ties between on-line, off-line worlds

by Eric Schroeder
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BENTONVILLE, Ark. — Wal-Mart Stores, Inc. plans to “win the future of retail” by making the right choices as a business, Doug McMillon, president and chief executive officer, told analysts during an Aug. 18 conference call to discuss second-quarter financial results. One of those choices involves bringing together on-line and off-line offerings, he said.“Through technology, data and mobile, we have incredible new ways to serve customers today, and the opportunities are only growing,” McMillon said. “We believe the winners in retail will be those who can bring together the best of the off-line world with the best of on-line to serve customers however they want to shop, and we believe Wal-Mart has unique competitive advantages in this race.”

To that end, McMillon said Wal-Mart is beginning to see the pieces come together for a successful grocery home shopping program, particularly in the United States.

“I am particularly pleased with the number of repeat customers we have and the strength of our average ticket,” he said. “Anecdotally, I can share that customers have told us it is changing their perception of the shopping experience at Wal-Mart. In stores, we’ve been aggressively pursuing store pickup options, and pickup, while on a very small base in Wal-Mart terms, is growing very quickly.”

Neil Ashe, president and CEO of global eCommerce at Wal-Mart, said overall global eCommerce constant currency sales grew approximately 16 percent during the second quarter of fiscal 2016, while gross merchandise value increased about 18 percent.“We are using e-commerce to bring both new customers to Wal-Mart as well as to deepen our relationship with our existing customers,” Ashe said.

He said Wal-Mart opened two new automated on-line fulfillment centers during the quarter and has two more planned for the third quarter. He also said the company has started a test of an unlimited free shipping program priced at $50 for one year.

“I’m pleased with the expansion in progress on grocery home shopping in the U.S.,” he said. “We are in five markets and sales continue to grow because customers, especially moms with children, love the convenience of ordering on-line and having their car loaded at a pickup location.”

Net income at Wal-Mart in the second quarter ended July 31 was $3,475 million, equal to $1.08 per share on the common stock, down 11 percent from $3,923 million, or $1.27 per share, in the same period a year ago. Total revenues were $120,229 million, up narrowly from $120,125 million.

Operating income at Wal-Mart US in the second quarter was $4,819 million, down 8 percent from $5,252 million in the same period a year ago. Net sales increased nearly 5 percent to $73,959 million from $70,601 million.
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